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WORKINGMEN'S 

INSURANCE 

IN  EUROPE 


BY 
LEE    K.   FRANKEL 

AND 

MILES  M.   DAWSON 


WITH    THE    CO-OPERATION    OF 

LOUIS    I.    DUBLIN 


NEW     YORK 

CHARITIES     PUBLICATION 
COMMITTEE  .    MCMXI 


Copyright,  1910,  by 
THE  RUSSELL  SAGE  FOUNDATION 


Printed  August,  1910 
Reprinted  September,  1911 


PRESS   OF  WM.  F.  FELL  CO. 
PHILADELPHIA 


FOREWORD 

REALIZING  that  the  subject  of  insurance  for  workingmen 
was  one  of  great  importance  and  that  it  was  a  pressing 
one  in  the  United  States,  the  Russell  Sage  Foundation  early 
in  1908  secured  the  services  of  Mr.  Lee  K.  Frankel  to  make  a 
study  of  insurance  in  Europe.  Mr.  Frankel  was  specially  qualified 
for  the  work  by  his  wide  experience  in  social  work  and  a  knowledge 
of  the  problems  involved  gained  by  acquaintance  with  families  of 
working  people.  Soon  after  he  began  to  plan  the  study  he  asso- 
ciated with  him  Mr.  Miles  M.  Dawson,  who  was  thoroughly  ex- 
pert on  the  technical  side  of  insurance  and  well  informed  as  to 
its  social  bearings. 

Information  about  workingmen's  insurance  is  specially 
needed  at  this  time.  Eight  states  have  appointed  official  commis- 
sions to  study  the  subject  and  report  plans  for  adoption.  These 
commissions  include  employers,  members  of  trade  unions  and 
social  workers.  A  committee  of  the  National  Manufacturers' 
Association,  after  much  study,  submitted  an  interesting  report 
at  the  recent  annual  meeting  of  the  Association.  The  committee's 
resolution  adopting  the  principle  of  compensation,  in  preference 
to  the  system  of  employers'  liability  now  prevalent,  was  passed 
unanimously,  as  well  as  a  resolution  urging  a  wider  use  of  pre- 
ventive machinery.  Two  conferences  of  members  of  state  com- 
missions and  others  interested  have  been  held.  The  interest  in 
insurance  is  evidently  widespread  and  steadily  growing.  Yet 
there  has  been  little  experience  in  the  United  States  on  which  to 
base  positive  recommendations;  nor  have  we  sufficient  informa- 
tion, in  easily  accessible  form,  to  enable  us  to  decide  how  European 
precedents  may  be  wisely  followed  under  American  conditions. 

This  volume  presents  the  results  of  a  careful  investigation, 
covering  about  six  months,  of  the  systems  of  insuring  workingmen 
in  operation  in  European  countries.  It  gives  in  fuller  detail  than 
has  been  done  heretofore  in  this  country  the  various  kinds  of 

v 


FOREWORD 

European  insurance,  their  methods  of  operation,  their  finances 
and  their  relations  with  governments.  Unfortunately  it  was  not 
possible  to  study  the  general  social  effects  of  the  policies  adopted 
in  Europe  nor  their  effect  on  the  various  manufacturing  and  other 
enterprises  upon  which  they  operated.  Shortly  after  his  return 
from  Europe  Mr.  Frankel  accepted  an  invitation  to  take  charge 
of  the  industrial  department  of  the  Metropolitan  Life  Insurance 
Company.  This  prevented  his  pursuing  the  study,  so  it  seemed 
best  to  do  nothing  more  until  this  volume  was  issued. 

The  compilation  of  the  information  gathered  and  its  pre- 
sentation in  proper  form  have  taken  much  time.  The  consequent 
postponement  of  the  date  of  issue  has  seemed  amply  justified. 

JOHN  M.  GLENN 

NEW  YORK,  August,  1910 


VI 


PREFACE 

THE  studies  on  which  this  volume  is  based  were  made  for 
the  purpose  of  obtaining  accurate  and  recent  information 
concerning  the  methods  in  operation  in  certain  European 
countries  for  the  protection  of  workingmen  and  their  dependents 
from  the  financial  consequences  of  the  following  misfortunes : 

I.  Death   from   industrial   accidents   or  from   other 
causes,  such  as  sickness  or  accidents  not  industrial. 

II.  Disablement;    temporary  or  permanent,  total  or 
partial;    from  industrial  accidents  or  from  other  causes, 
such  as  sickness,  old  age,  or  accidents  not  industrial. 
III.  Involuntary  unemployment. 

Prior  to  1908  the  only  important  works  on  workingmen's 
insurance  that  had  been  published  in  the  United  States  were 
John  Graham  Brooks'  Compulsory  Insurance  in  Germany,  pub- 
lished in  1893  as  a  special  report  of  the  United  States  Bureau  of 
Labor,  the  comprehensive  work  of  W.  F.  Willoughby,  Working- 
men's  Insurance,  which  appeared  in  1898,  and  a  report  on  Indus- 
trial Accidents  by  A.  F.  Weber,  of  the  New  York  State  Bureau  of 
Labor,  in  1899.  The  progress  made  in  Europe  since  these  reports 
appeared  has  been  extraordinary ;  for  this  reason  and  in  view 
of  the  agitation  and  interest  in  the  subject  of  workingmen's 
insurance  in  the  United  States,  it  is  believed  that  the  present 
report  is  timely. 

Since  the  investigation  was  originally  undertaken,  in  1908, 
an  interesting  work  by  F.  W.  Lewis,  on  the  obligatory  systems 
of  insurance  in  Europe,  entitled  State  Insurance,  and  several 
valuable  publications  treating  of  workingmen's  insurance  in  the 
United  States  have  appeared.  Among  these  may  be  mentioned: 
Industrial  Insurance  in  the  United  States  by  Charles  R.  Henderson 
(The  University  of  Chicago  Press,  1909);  The  Beneficiary 
Features  of  American  Trades  Unions  by  James  B.  Kennedy 
(Johns  Hopkins  University  Press,  1909);  and  the  Twenty-third 

vii 


PREFACE 

Annual  Report  of  the  United  States  Commissioner  of  Labor, 
entitled,  Workmen's  Insurance  and  Benefit  Funds  in  the  United 
States.  In  the  Bibliography  at  the  end  of  this  volume  will  be 
found  the  titles  of  the  more  important  publications,  American  and 
foreign,  that  deal  with  our  subject. 

This  present  report  has  been  confined  to  a  study  of  the 
systems  in  force  in  Great  Britain,  Norway,  Sweden,  Denmark, 
Holland,  Belgium,  France,  Switzerland,  Italy,  Germany  and 
Austria.  These  countries  were  visited  by  the  investigators,  as 
they  were  the  only  ones  in  Europe  having  systems  of  working- 
men's  insurance  which  especially  warranted  study  at  close  range. 
Special  attention  is  called  to  Appendix  I,  which  contains  a  summary 
of  insurance  systems  now  in  operation  in  the  various  countries. 

In  the  preparation  of  the  report,  a  large  amount  of  original 
literature,  collected  at  the  time  of  the  investigation,  has  been  made 
use  of.  This  includes  reports  of  bureaus  of  labor,  insurance  de- 
partments, and  individual  societies  and  associations.  In  all  cases 
the  statistics  employed  have  been  taken  from  the  latest  pub- 
lished statements  obtainable.  Due  credit  should  be  given  to  the 
articles  on  workingmen's  insurance  in  the  Handworterbuch  der 
Staatswissenschaften,  of  which  liberal  use  has  been  made  with 
the  consent  of  their  authors.  The  material  collected  was  studied 
by  Dr.  Louis  I.  Dublin,  who  prepared  the  detailed  descriptions  and 
the  statistics  of  the  phases  of  workingmen's  insurance  in  the  various 
countries,  the  tables  in  the  appendices  and  the  Bibliography. 

The  authors  desire  to  express  their  appreciation  for  the  unfail- 
ing courtesy  shown  to  them  while  in  Europe  by  officials  of  various 
insurance  departments,  insurance  companies,  labor,  statistical  and 
other  governmental  bureaus,  actuaries  and  others  interested  in 
workingmen's  insurance.  They  wish,  also,  to  acknowledge  valua- 
ble suggestions  from  Mr.  William  F.  Willoughby  and  officials  of 
the  United  States  Bureau  of  Labor. 


Vlll 


TABLE  OF  CONTENTS 


PAGE 


FOREWORD v 

LIST  OF  TABLES  xiii 


INSURANCE  AGAINST  INDUSTRIAL  ACCIDENTS 

I.  Employers'  Liability          3 

II.  Insurance  of  Employers  in  Private  Companies      .       .14 

III.  Insurance  of  Employers  in  Mutual  Associations    .       .     26 

IV.  Insurance  of  Employers  in  Government  Departments    33 

V.  Workmen's  Compensation  and  Accident  Insurance  in 

Various  Countries 42 

Great  Britain,  42;  Norway,  48;  Sweden,  51;  Den- 
mark, 54;  Holland,  57;  Belgium,  61;  France,  64; 
Switzerland,  73 ;  Italy,  81;  Germany,  89;  Austria,  115. 

VI.  Insurance  of  Employers  from  the  Standpoint  of  Public 

Policy 133 


INSURANCE  AGAINST  SICKNESS  AND  DEATH 

VII.  Sickness  Insurance 147 

VIII.  Funeral  Insurance 160 

IX.  Maternity  Insurance *.       .       ..    166 

ix 


TABLE   OF   CONTENTS 

PAGE 

X.  Insurance  against   Sickness   and   Death   in   Various 

Countries 169 

Great  Britain,  169;  Norway,  183;  Sweden,  187;  Den- 
mark, 189;  Holland,  193;  Belgium,  199;  France,  201; 
Switzerland,  214;  Italy,  224;  Germany,  227;  Austria, 
262. 


INSURANCE  AGAINST  INVALIDITY  AND  OLD  AGE 

XI.  Insurance  against  Invalidity 281 

XII.  Old  Age  Annuities  and  Pensions 287 

XIII.  Pensions  to  Widows  and  Orphans         .       ...  304 

XIV.  Insurance  against  Invalidity  and  Old  Age  in  Various 

Countries 313 

Great  Britain,  313;  Norway,  315;  Sweden,  317;  Den- 
mark, 318;  Holland,  319;  Belgium,  320;  France,  322; 
Switzerland,  340;  Italy,  343;  Germany,  346;  Austria, 
361. 

INSURANCE  AGAINST  UNEMPLOYMENT 

XV.  Insurance  against  Unemployment         ....  367 

XVI.  Insurance  against  Unemployment  in  Various  Countries  378 
Great  Britain,  379;  Norway,  380;  Sweden,  381;  Den- 
mark, 381;  Holland,  383;  Belgium,  385;  France,  385; 
Switzerland,  386;   Italy,  388;  Germany,  389;  Austria, 
392. 


COMPLETE  INSURANCE  SYSTEMS 

XVII.  Tendency  toward  a  Complete  and  Connected  System 

of  Insurance  for  Workingmen 395 

XVIII.  The  Reform  Project  in  Germany 406 

XIX.  The  Reform  Project  in  Austria 414 

x 


TABLE  OF  CONTENTS 
APPENDICES 

PACK 

I.  Summary  of  laws,  institutions   and   administration   of 
Workingmen's  Insurance  Systems  in  Europe        .       .  422 

II.  Cost  and  Benefits  of  Workingmen's  Insurance  in   Ger- 
many, 1907 430 

III.  Statistics  of  Accident  Insurance  in  Switzerland,  1907    .  432 
IV.  Table  of  Foreign  Money  Values    .        .       .        .       .       .  433 


BIBLIOGRAPHY 435 

INDEX 443 


XI 


LIST  OF  TABLES 

INSURANCE  AGAINST  INDUSTRIAL  ACCIDENTS 

TABLE  Great  Britain  PACK 

1.  Benefits  and  rates  of  the  Law,  Union  and  Crown  Insurance  Company     .         45 

2.  Number  of  employes,  accidents  and  diseases,  and  compensation  paid  in 

certain  industries,  1908 47 

Sweden 

3.  Present  values  of  annuities  pay  able  quarterly  under  the  law  of  i  QO  i        .         53 

Denmark 

4.  Proportions  of  various  degrees  of  impairment  in  accident  cases,  1906      .          57 

Holland 

5.  Total  number  of  accidents,  cost  of  management  and  amount  of  indem- 

nities paid,  1903-1905 60 

France 

6.  Percentage  distribution  of  accident  insurance  by  kind  of    company, 

1901  and  1906 68 

7.  Ratio  of  premium   receipts  to  payrolls,   in  insurance  companies  and 

societies,  1901-1906 69 

8.  Income  and  expenditures  of  the  National  Guarantee  Fund,  1905-1906   .         70 

9.  Number  of  accidents  in  24  classes  of  industries  and  occupations,  1903- 

1906 70 

10.  Fatalities  and  injuries  in  mines  and  quarries,  1901-1906        ...         71 

Switzerland 
u.  Number  employed,  accidents  and  compensation  paid  in  factories  and 

trades,  1888-1902 75 

12.  Estimated  total  and  distribution  of  expenditure  for  accident  insurance  .         81 

Italy 

13.  Statistics  of  accident  insurance,  1903-1905,  and  of  the  National  Acci- 

dent Fund,  1903-1906 88 

Germany 

14.  Summary  of  accident,  sickness,  and  invalidity  and  old  age  insurance 

statistics,  1906 91 

15.  Number  of  associations,  establishments,  state  executive  boards,   and 

persons  insured  against  accident,  .1885-1907 101 

1 6.  Total    number   of    accidents,    number    and    proportions   compensated, 

1888-1907 103 

17.  Number  of  accidents,  and  number  per  1000  persons  insured  in  industrial 

mutual  associations,  1888-1907 104 

1 8.  Ratio  of  accidents  per  1000  full-time  workers  in  22  classes  of  occupations, 

1906-1907 105 

xiii 


LIST   OF   TABLES 

TABLE  PAGE 

19.  Causes  of  accidents  in  industrial,  building,  marine  and  trade  associations, 

for  which  compensation  was  first  paid  in  1907 106 

20.  Number  of  accidents  in  agriculture  and  forestry  and  ratio  per  1000  in- 

sured, 1890-1907 106 

21.  Disbursements  classified  by  kind  of  expenditure,  1885-1907.        .       .  107 

22.  Compensation  per  person  injured  and  member  treated,  1885-1906       .  108 

23.  Number,  per  cent  and  disposition  of  awards  appealed  to  courts  of  arbi- 

tration, 1886-1907 109 

24.  Number,  per  cent  and  disposition  of  appeals  from  courts  of  arbitration 

to  the  Imperial  Insurance  Office,  1886-1907 109 

25.  Items  of  management  expense  of  mutual  associations  of  employers,  1885- 

1907 in 

26.  Receipts  of  mutual  associations  of  employers,  1885-1907       .        .       .       112 

27.  Amount  of  reserve  fund  of  the  mutual  associations  of  employers,  1885- 

1907 N 113 

Austria 

28.  Classification  of  industries  by  hazards  in  the  territorial  accident  insurance 

organizations 119 

29.  Rates  of  contribution  in  the  seven  territorial  insurance  organizations     .  119 

30.  Rates  of  contribution  for  each  danger  class 120 

31.  Number  of  industrial  and  agricultural  establishments,  average  number 

of  insured  employes  and  amount  of  wages,  1890-1906        ...        122 

32.  Total  number  of  accidents  and  number  per  10,000  full-time  workers, 

1890-1906 123 

33.  Number  of  accidents  and  number  per  10,000  full-time  workers  requiring 

and  not  requiring  compensation,  1890-1906 124 

34.  Number  of  fujl-time  workers  insured  and  proportion  of  accidents  for 

56  industries,  1906 125 

35.  Number  and  amount  of  current  permanent  pensions,  1897-1906     .       .  127 

36.  Amount  of  burial  benefits  and  pensions  paid,  1904-1906       .       .        .  127 

37.  Number  of  pensioners,  average  annual  pension  and  per  cent  of  wages, 

1906 128 

38.  Total  disbursements  of  insurance  associations,  1904-1906      .        .        .  129 

39.  Ratio  of  management  expenses  to  contributions  and  indemnities,  1890-1906  129 

40.  Premiums,  interest  and  other  income  of  insurance  associations,  1904-1906  130 

41.  Assets  and  liabilities  of  insurance  associations,  1904-1906     .       .       .  131 

42.  Disposition  of  cases  by  courts  of  arbitration,  1904-1906.       ...  132 


INSURANCE  AGAINST  SICKNESS  AND  DEATH 

Great  Britain 

43.  Statistics  of  the  National  Deposit  Friendly  Society,  1897-1905     .       .       175 

44.  Financial  statement  of  the  National  Deposit  Friendly  Society,  1907    .        170 

45.  Contribution  per  month,  for  lowest  and   highest  scale  of  benefits,  Inde- 

pendent Order  of  Odd  Fellows      179 

46.  Membership  and  funds  of  registered  friendly  societies  and  branches  in 

Great  Britain  and  Ireland,  December  31,  1899  and  1905.       .       .       182 

Norway 

47.  Estimated  number  of  persons  covered  by  sickness  insurance  law  of  1909  185 

48.  Estimated  net  cost  of  insurance  under  sickness  insurance  law  of  1909     .  185 

49.  Income  classes  proposed  under  sickness  insurance  law  of  1909      .        .  185 

xiv 


LIST  OF  TABLES 

FABLE  PAGE 

Denmark 

50.  Sickness  disbursements  of  the  "  Fremtiden,"  1907 191 

France 

51.  Number  of  free  and  approved  societies,  1898-1908 204 

52.  Membership  of  free  and  approved  societies,  1898-1907    ....  204 

53.  Income  of  approved  and  free  societies,  1898,  1903,  1904        .        .        .  206 

54.  Number  of  beneficiaries  of  approved  and  free  societies   ....  206 

55.  Character  and  value  of  benefits  paid  by  approved  and  free  societies,  1904  208 

56.  Monthly  dues  charged  by  communal  sickness  insurance  societies   .        .  210 

57.  Number  and  membership  of  trade  associations  which  pay  benefits,  France, 

1900,  1905 2ii 

58.  Statistics  of  miners' sickness  societies,  1900  and  1906     ....       212 

Switzerland 

59.  Number  and  per  cent  of  sickness  insurance  societies  and  of  their  member- 

ship, by  kind  of  benefit 217 

60.  Number  and  per  cent  of  compulsory  and  voluntary  sickness  insurance 

societies  and  of  their  membership,  1903 218 

61.  Number  and  per  cent  of  sickness  insurance  societies  by  class,  1880-1903   219 

62.  Income  and  expenditures  of  sickness  insurance  societies,  1903.        .       .       219 

Italy 

63.  Number  of  mutual  aid  societies,  membership  and  funds,  1862-1904        .       225 

64.  Percentages  of  disbursements  in  sickness  insurance  societies,  1904  .        .       226 

Germany 

65.  Number  of  sickness  insurance  societies,  by  class,  1885-1907  .       .       .       236 

66.  Number  insured  in  sickness  insurance  societies,  1885-1907     .        .        .       237 

67.  Average  number  of  members  per  sickness  insurance  society,  1885-1907      237 

68.  Number  of  sickness  insurance  societies  according  to  size  of  membership, 

1907 239 

69.  Number  of  men  and  women  in  sickness  insurance  societies,  1885-1907       239 

70.  Per  cent  and  duration  of  sickness  and  per  cent  of  deaths  in  sickness  in- 

surance societies,  1888-1907 240 

71.  Average  number  of  cases  of  sickness  for  both  sexes  per  100  insured  in 

sickness  insurance  societies,  1888-1907 241 

72.  Total  and  average  cost  of  medical  treatment  and  medicines,  sickness  in- 

surance societies,  1885-1907 243 

73.  Total  cost  of  hospital  service,  sickness  insurance  societies,  1902-1907     .       243 

74.  Average  cost  of  hospital  service  per  member,  sickness  insurance  societies, 

1885-1907 243 

75.  Total  cost  of  care  of  convalescents,  sickness  insurance  societies,  1902- 

1907 244 

76.  Total  sick  benefits  paid,  sickness  insurance  societies,  1902-1907  .       .       244 

77.  Average  sick  benefits  per  member,  sickness  insurance  societies,  1885- 

1907 245 

78.  Average  amount  of  death  benefits,  sickness  insurance  societies,   1892- 

1907 246 

79.  Membership  and  amount  of  sick  benefits,  including  those  for  women 

before  and  after  confinement,   sickness    insurance  societies,    1903- 
1907 246 

80.  Total  disability  and  death  benefits,  sickness  insurance  societies,  1902- 

1907 247 

81.  Total  benefits  per  member,  sickness  insurance  societies,  1885-1907      .       248 

82.  Percentage  of  various  kinds  of  benefits  paid,  sickness  insurance  societies, 

1907 248 

XV 


LIST  OF  TABLES 

TABLE  PACK 

83.  Percentage  of  sickness  insurance  societies  collecting  given  percentages 

of  wages,  1885-1907 249 

84.  Total   contributions  of   members,   sickness   insurance   societies,    1902- 

1907 250 

85.  Average  annual  contributions  per  member,  sickness  insurance  societies, 

1888-1907 250 

86.  Benefits  and  contributions,  sickness  insurance  societies,  1906  and  1907      251 

87.  Average    benefits   and    contributions    per   member,  sickness  insurance 

societies,  1907 251 

88.  Total  cost  of  management,  sickness  insurance  societies,  1902-1907      .       252 

89.  Average  cost  of  management  per  member  of  sickness  insurance  societies, 

1902-1907 252 

00.  Income  and  disbursements  of  all  sickness  insurance  societies,  1906-1907       253 

91.  Total  income  and  disbursements  of  sickness  insurance  societies  accord- 

ing to  class,  1907 254 

92.  Number  and  per  cent  of  solvent  and  insolvent  sickness  insurance  societies, 

1907 255 

93.  Total  and   average   reserve   per  member,  sickness  insurance  societies, 

December  31,  1907 255 

94.  Weekly  contributions  and  sick  and  funeral  benefits  by  wage  classes. 

Local  society  of  Leipsic,  1908 258 

95.  Receipts  and  disbursements  of  the  local  society  of  Leipsic,  1908      .       .       260 

Austria 

96.  Number  of  sickness  insurance  societies,  December  31,  1890-1906    .       .       266 

97.  Number  and  average  membership  of  sickness  insurance  societies,  1890- 

1906 267 

98.  Per  cent  of  sexes  in  sickness  insurance  societies,  1906     ....       267 

99.  Average  number  and  per  cent  of  sickness  insurance  societies  and  of  mem- 

bership, 1906 268 

100.  Total  number  of  cases  and  days  of  sickness  and  deaths  in  sickness  insur- 

ance societies,  1890-1906 269 

101.  Cases  and  days  of  sickness  and  death  rate  in  sickness  insurance  societies, 

1890-1906 270 

1 02.  Cases  and  days  of  sickness  and  death  rate  in  sickness  insurances  societies, 

1906 271 

103.  Total  benefits  and  other  expenditures  of  sickness  insurance  societies, 

1906' 271 

104.  Ratio  of  various  items  of  expenditure  to  total,  and  amount  expended 

per  member  in  sickness  insurance  societies,  1906         ....       272 

105.  Ratio  of  various  benefits  to  total  benefits  in  sickness  insurance  societies.       273 

106.  Average  benefits  per  day,  per  case  of  sickness,  and  per  death  in  sickness 

insurance  societies,  1906 273 

107.  Average  contribution  and  average  benefit  per  member  in  sickness  insur- 

ance societies,  1906 274 

1 08.  Income  and  disbursements  of  sickness  insurance  societies,  1906    .       .  274 

109.  Financial  condition  of  sickness  insurance  societies,  1906        .       .       .  275 

110.  Financial  condition  of  sickness  insurance  societies,  in  percentages,  1906  276 
in.  Appeals  from  courts  of  arbitration  in  sickness  insurance  societies,  1906  .  277 


INSURANCE  AGAINST  INVALIDITY  AND  OLD  AGE 

Great  Britain 
M2.  Amounts  allowed  under  old  age  pension  act 315 

xvi 


LIST  OF   TABLES 

TABLE  PAGE 

Belgium 

113.  Number  and  amount  of  deposits  and  amount  of  annuities  in  state  an- 

nuity fund,  1890-1906 322 

France 

114.  Number  and  amount  of  deposits  and  amount  of  reserves  in  the  Caisse 

Nationale  des  Retraites,  1884-1906 324 

115.  Individual  deposits  according  to  size  in  the  Caisse  Nationale  des  Re- 

traites, 1906 325 

1 16.  Collective  deposits  in  the  Caisse  Nationale  des  Retraites,  1906.        .        .       320 

1 17.  Annuities  granted  at  different  ages  for  an  annual  premium  of  one  franc, 

Caisse  Nationale  des  Retraites 328 

1 18.  Deposits  under  the  principal  not  returnable  and  principal  returnable  « 

plans,  Caisse  Nationale  des  Retraites,  1851-1896,  1906      .       .       .       329 

119.  Number  and  value  of  annuities  since  1851  and  in  force  December  3 1 ,  1906, 

Caisse  National  des  Retraites 329 

120.  Annuity  secured  in  La  France  Prevoyante  by  annual  payment  of  12 

francs 338 

121.  Premiums  required  to  purchase  an  annuity  of  150  francs,  beginning  at 

age  fifty,  in  PreVoyance  Commerciale 339 

Switzerland 

122.  Number  and  value  of  policies  in  insurance  department  and  amount  of 

cantonal  subsidy,  Canton  Neuenburg,  1899-1906      ....       340 

123.  Annuities  secured  by  annual  payment  of  10  francs,  without  subsidy  from 

the  canton,  Canton  Waadt 342 

124.  Annuities  secured  at  the  age  of  sixty  by  continuous  annual  payments  of 

6,  12,  24  and  60  francs  in  addition  to  annual  subsidy  from  the  canton, 
Canton  Waadt 342 

Italy 

125.  Number  insured  and  value  of  annuity  fund,  December  31,  1899-1907     .       346 

Germany 

126.  Joint  weekly  contributions  of  employer  and  employes  for  old  age  and 

invalidity  insurance  by  wage  class 348 

127.  Annual  pensions  and  government  bonuses  by  wage  class  under  old  age 

insurance 349 

128.  Annual  pensions  and  government  bonuses  by  wage  class  under  invalidity 

insurance 350 

129.  Number  of  insurance  agencies  and  of  persons  insured  against  old  age  and 

invalidity,  1891-1907 353 

130.  Number  of  pensions  and  number  paid  for  first  time,  for  invalidity,  sick- 

ness and  old  age,  1891-1908 353 

131.  Average  pensions  paid  for  invalidity,  sickness  and  old  age,  1891-1907    .  355 

132.  Expenditures  for  benefits  for  invalidity,  sickness  and  old  age,  1891-1907  356 

133.  Number  and  value  of  contributions  returned  under  old  age  and  invalidity 

insurance,  1891-1908 357 

134.  Number  of  pensions  and  of  contributions  returned,  and  number,  per  cent 

and  disposition  of  appeals  to  courts  of  arbitration  under  old  age  and 
invalidity  insurance,  1891-1907    . 357 

135.  Total  number  of  appeals  and  number  and  disposition  of  these  decided  by 

the  Imperial  Insurance  Office  under  old  age  and  invalidity  insurance, 
1891-1907 358 

136.  Disbursements  for  old  age  and  invalidity  insurance,  1891-1907       .        .       358 

137.  Expenses  of  management  in  detail  under  old  age  and  invalidity  insurance, 

1891-1907 359 

xvii 


LIST  OF   TABLES 

TABLE  PACE 

138.  Receipts  in  detail  under  old  age  and  invalidity  insurance.  1891-1907    •'.       359 

139.  Amount  of  reserve  funds  on  December  31,  under  old  age  and  invalidity 

insurance,  1891-1907 360 

Austria 

1 40.  Wage  classification  of  insurance  against  invalidity  and  old  age        .       .       362 


141.  Receipts  and  disbursements  of  Danish  unemployment  funds  for  eight 

months  ending  March  31,  1908 382 

Italy 

142.  Membership  and  benefits  of  unemployment  department  of  Umanitaria, 

Italy,  1906  and  1907 388 

Germany 

143.  Statistics  of  the  unemployment  fund  in  Cologne,  1896-1908  .       .       .       390 


COMPLETE  INSURANCE  SYSTEMS 

144.  Proposed  contributions  for  old  age  and  invalidity  insurance  in  reform 

project,  Germany 413 

145.  Estimated  cost  of  insurance   to  employers   and   employes   in   reform 

project,  Austria 419 


XV111 


INSURANCE  AGAINST  INDUSTRIAL 
ACCIDENTS 


I    F 


I 

EMPLOYERS'  LIABILITY 

IN  all  modern,  civilized  countries  an  employer  is   held  liable 
for  damages  resulting  from  industrial  accidents  due  to  his 
own  negligence.     In  virtually  all  civilized  countries,  including 
the  United  States  under  recent  federal  legislation,  this  principle  has 
been  extended  not  only  to  hold  the  employer  liable  for  damages 
caused  by  his  alleged  fault,  but  to  include  the  idea  that  part  or 
all  of  the  aggregate  loss  or  damage  caused  by  industrial  accidents 
should  become  part  of  the  cost  of  the  product  to  be  paid  for  by  the 
consumer. 

Evidently  equalization  of  this  burden  can  be  more  per- 
fectly and  adequately  accomplished  through  insurance.  Other- 
wise, an  employer  might  suffer  a  heavy  loss  which,  by  reason  of 
competition,  he  would  not  be  able  to  include  in  the  price  of  com- 
modities and  which  he  would  be  required  himself  to  bear.  Such 
a  loss  might  mean  ruin  to  him,  and  to  his  workmen,  left  without 
indemnity.  Insurance,  properly  devised,  distributes  this  loss  and 
renders  indemnification  certain. 

The  principle  that  the  employer  should,  to  a  reasonable 
extent,  be  held  liable  for  some  part  of  the  damages  resulting  from 
all  industrial  accidents,  was  recognized  in  Germany  in  the  year 
1871.  Since  then  it  has  been  definitely  established  in  Austria, 
Norway,  Great  Britain,  France,  Italy,  Holland,  Denmark,  Belgium, 
Sweden,  Finland,  Russia,  Greece,  Spain,  New  Zealand,  Australia, 
the  province  of  Quebec  in  Canada  and  in  the  United  States. 

In  most  countries  employers  protect  themselves  against 
loss  by  means  of  insurance.  In  some,  this  may  be  taken  in 
private  companies,  recognized  by  the  state,  in  which  case  the 
employer  sometimes  is,  but  usually  is  not,  absolved  from  liabil- 
ity. If  insured  by  the  state,  or  as  in  certain  countries,  by 

3 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

licensed  companies  of  the  country,  the  employer  is  usually  freed 
from  liability.  In  two  countries,  insurance  of  employers  is  compul- 
sory and  must  be  in  mutual  companies  provided  for  by  law;  and 
employers  are  not  free  to  insure  themselves  in  other  private  com- 
panies. In  one  country,  they  are  required  to  insure  in  the  state 
institutions.  In  several  countries,  employers  are  given  the  oppor- 
tunity of  contributing  to  insurance  taken  by  their  workmen  in 
establishment  funds,  not  merely  to  the  amount  of  their  own  lia- 
bility, but  for  other  benefits  as  well.  In  such  cases,  the  employer 
contributes  only  a  portion  of  the  total  cost  of  insurance ;  but  when 
the  loss  is  indemnified  by  the  fund,  he  escapes  further  liability. 
His  contributions,  therefore,  pay  for  the  insurance  requisite  for 
his  own  protection. 

The  state  itself  sometimes  makes  contributions  in  the  form 
of  subsidies  or  otherwise,  the  principles  upon  which  these  are 
based  being  as  follows: 

(1)  Supervision  along  with'  an  administrative  subsidy  will 
be  more  economical  than  any  other  method  and  is  justified  on  the 
same  grounds  as  supervision  of  other  branches  of  business. 

(2)  If  insurance  is  effectual,  it  will  give  relief  to  an  amount 
greater  than  its  cost  to  the  state,  through  the  reduction  of  the 
general  taxes,  and  the  protection  of  its  citizens  from  disability  and 
often  from  disaster. 

THEORY  OF  NEGLIGENCE  IN  EMPLOYERS'  LIABILITY 
The  subject  of  insurance  against  industrial  or  occupational 
accidents  will  be  taken  up  first,  although  it  was  one  of  the  latest 
phases  of  workingmen's  insurance  to  be  developed.  It  is  through 
this  form  that  the  whole  subject  of  the  protection  of  workingmen 
has  come  to  be  considered  in  an  entirely  new  light.  A  knowledge  of 
what  has  taken  place  in  this  field  is  necessary  in  order  to  understand 
what  is  now  taking  place  in  other  fields  of  workingmen's  insurance. 
This  branch  of  insurance,  as  carried  on  in  European  countries,  is 
also  of  great  importance  in  illustrating  the  change  which  has 
occurred  concerning  the  principles  upon  which  employers  should 
be  held  liable,  if  at  all,  to  pay  a  part  or  all  of  the  financial  losses 
to  workingmen  and  their  families  due  to  industrial  accidents. 
In  order  to  appreciate  the  nature  of  the  great  and  revolu- 

4 


EMPLOYERS'  LIABILITY 

tionary  change  of  European  thought  in  regard  to  this  matter, 
it  is  necessary  first  of  all  to  understand  the  principles  which, 
only  a  quarter  century  ago,  in  all  communities,  determined  the 
right  of  a  workman  to  recover  compensation  from  his  employer. 
Those  principles  still  apply,  with  some  modification,  in  all  the 
states  of  the  United  States,  and  have  but  recently  been  discarded 
in  part  by  the  federal  government  itself.  The  elementary  theory 
of  "the  law  of  negligence,"  as  it  is  usually  called,  in  its  relation 
to  the  liability  of  employers  for  financial  loss  to  workmen  and 
their  families,  was  originally  the  same  in  all  civilized  countries. 
The  development  of  the  law  of  liability  has  not  been  identical 
in  every  country,  but  nowhere,  probably,  has  the  principle  been 
pushed  so  far  as  in  the  United  States.  The  doctrine  has,  however, 
been  modified  somewhat  by  decisions  of  the  courts  and  by  acts 
of  our  legislatures.  It  will,  therefore,  be  useful  to  outline  the  gen- 
erally accepted  theory  in  the  United  States  and  the  modifications 
made  by  statute  and  by  decisions  of  the  courts. 

The  underlying  principle  of  the  law  of  negligence  is  that  the 
employer  is  liable  only  in  case  he  is  at  fault;  that  is,  he  must  have 
been  neglectful  in  some  respect  and  this  negligence  must  have  been 
the  proximate  and  sole  cause  of  the  accident.  In  that  case  it  declares 
that  he  alone  must  bear  the  financial  burden  of  compensation. 

Liability  of  the  employer  for  his  own  negligence  is  qualified 
as  follows : 

First,  it  is  not  enough  that  he  was  the  chief  cause. 

If  the  employe  himself  has  been  negligent  and  if  this  in  any 
degree  contributed  to  the  accident,  the  employer  is  not  held. 
This  is  known  as  the  principle  of  "contributory  negligence." 
The  idea  is  that  the  courts,  not  being  able  to  separate  results 
flowing  from  these  two  causes  and  to  determine  how  much  was 
due  to  one  and  how  much  to  the  other,  will  refuse  to  grant 
compensation  if  the  employe's  negligence  contributed  to  the 
accident  even  though  only  in  a  slight  degree. 

Second,  the  accident  must  not  have  been  a  consequence  of  the 
ordinary  risks  of  the  occupation. 

If  it  can  be  shown  or  the  conclusion  fairly  be  deduced  that 
the  employe  assumed  this  particular  risk  as  a  condition  of  his  con- 
tract of  employment,  or  as  the  ordinary  risk  of  his  occupation  of 

5 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

which  he  knew  or  was  bound  to  know,  the  employer  is  not  held.  If 
the  employe  was  aware  that  a  certain  danger  existed  and  not- 
withstanding continued  to  work,  this  action  on  his  part  would 
bar  recovery.  As  a  corollary  to  this,  the  courts  have  held  very 
generally  that  the  employe  must  be  presumed  to  know  what  are 
the  ordinary  dangers  of  his  occupation,  and  even  what  are  the 
unusual  dangers  connected  with  continuing  to  perform  the  duties 
of  that  occupation,  when  the  place  where  it  is  carried  on,  or  the 
machinery  or  tools  with  which  it  is  carried  on,  are  defective. 

This  is  called  the  principle  of  "assumption  of  risk."  Some 
courts  have  gone  so  far  as  to  hold  that,  even  though  the  employer 
is  required  by  law  to  keep  the  machinery,  tools,  and  the  place  in 
which  the  work  is  done  in  a  certain  condition  of  safety,  and  that 
although  by  failing  to  do  so  he  has  rendered  himself  liable  to  a 
penalty,  the  workman,  notwithstanding,  will  not  be  able  to  re- 
cover if  he  has  known  of  these  defects  and  has  nevertheless  con- 
tinued to  work.  The  same  courts  have  also  held  that  the  fact 
that  he  has  called  the  defects  to  the  attention  of  his  employer  and 
asked  that  they  be  remedied,  will  not  render  the  employer  liable 
if  the  workman,  notwithstanding  that  the  defects  have  not  been 
remedied,  continues  to  work.  In  fact,  calling  the  defects  to  the 
attention  of  others  prejudices  his  claim  in  that  it  is  proof  positive 
that  he  knows  of  them. 

Third,  the  accident  must  lave  been  the  result  of  the  employer  s 
own  negligence  and  not  that  of  another  employe  or  employes. 

If  the  workman  has  been  injured  because  one  or  more 
of  the  employes  working  with  him  were  negligent,  the  employer 
will  not  be  held.  This  proceeds  from  the  idea  that  each  workman 
whose  negligence  has  caused  the  injury  should  himself  be  held 
financially  responsible;  and  since  in  most  cases  he  is  in  fact 
financially  irresponsible  and  could  not  respond  to  a  judgment, 
the  result  of  the  application  of  this  rule  is  that  the  persons  in- 
jured are  not  compensated  at  all.  This  is  directly  contrary  to  the 
rule  which  applies  when  the  injury  is  to  one  not  an  employe; 
in  that  case  the  employer,  under  the  general  doctrine  of  principal 
and  agent,  is  held  liable. 

The  principle  stated  above  is  known  in  practice  as  the 
"fellow  servant"  rule.  It  has  been  carried  so  far  by  some 

6 


EMPLOYERS     LIABILITY 

courts  that  it  is  difficult  to  see  how  a  corporation  employer  could 
be  held  responsible  at  all,  no  matter  what  officer  or  other  employe 
was  negligent.  Even  an  officer  is  an  agent  or  employe,  and  there- 
fore a  fellow  servant  with  all  other  employes,  although  the  courts 
have  usually  not  so  held.  Except  in  the  case  of  executive  officers, 
however,  the  rule  has  been  applied  so  sweepingly  that,  for  instance, 
a  scrubwoman  washing  out  railway  coaches  might  be  held  to  be  a 
fellow  servant  with  the  superintendent  of  the  road  and,  therefore, 
without  a  good  claim  against  the  company  for  negligence  attri- 
butable to  him. 

The  "fellow  servant"  rule  grew  up  in  the  courts  out  of  the 
simplicity  of  the  common  law,  which  in  its  origin  did  not  know 
employers  and  employes  in  the  modern  industrial  or  commercial 
sense,  but  only  "masters"  and  "servants."  The  law  did  not  hold 
the  master  liable,  even  on  the  ground  of  negligence.  It  certainly 
would  have  refused  to  require  him  to  compensate  one  servant  for 
the  negligence  of  another.  This  principle  manifestly  has  little  or 
no  suitability  for  the  uses  of  a  commercial  and  highly  organized 
industrial  community,  in  which  much  the  larger  part  of  the  service 
performed  by  employes  is  not  for  the  direct  enjoyment  of  the 
employer  but  is  part  of  the  aggregate  cost  of  products  or  services 
sold  by  him  to  the  public  at  a  price  to  cover  all  the  costs.  In 
recent  years  the  "fellow  servant"  rule  has  been  much  relaxed, 
first  by  the  courts  and  later  by  legislatures.  In  many  states  an 
employe  who  supervises  the  work  and  controls  the  workman  is  held 
to  be  a  "  vice-principal"  and  to  represent  the  employer,  so  that  his 
negligence  is  treated  as  if  it  were  the  negligence  of  the  employer. 

Other  modifications  of  the  rules  thus  laid  down  have  been 
made  from  time  to  time.  In  some  states  the  employer  is  not 
relieved  from  liability,  although  the  workman  may  have  continued 
to  work  after  being  aware  of  some  defect,  if  the  defect  is  in  viola- 
tion of  law. 

Under  the  rules  of  law  just  outlined,  a  very  large  pro- 
portion of  the  accidents  which  occur  in  the  industries  of  the 
country  go  uncompensated.  In  some  cases,  on  the  other  hand, 
the  employer  is  held  for  substantial  amounts,  and  occasionally 
very  large  verdicts  are  recovered,  but  in  only  a  small  percentage 
of  the  cases  is  the  compensation  adequate. 

7 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

Suits  also  are  encouraged  and  fostered  by  a  contingent  fee 
system  which,  not  many  decades  ago,  would  have  been  condemned 
by  the  courts  as  champertous.  In  most  of  such  cases  a  very 
large  part  of  the  amount  awarded  goes  to  the  attorney.  On  the 
other  hand,  there  are  frequent  complaints  that  strenuous  efforts 
are  made  to  secure  settlements  prematurely,  a  hard  bargain  being 
driven  when  the  workingman  and  his  family  are  in  the  sorest 
straits,  and  when  in  their  crushed  condition  they  can  have  little 
understanding  of  what  their  rights  really  are  and  little  ability  to 
enforce  them. 

As  our  industries  have  grown  larger  and  larger,  a  system  of 
insurance  has  sprung  up  under  which  the  employer's  liability  is 
directly  covered,  the  insurance  company  promising  to  indemnify 
him  for  all  sums  which  he  may  be  required  to  pay  as  damages  for 
industrial  accidents.  Policies  usually  put  a  limitation  upon  the 
amount  which  may  be  paid  for  the  injuring  or  killing  of  any  one 
person  and  also  prescribe  a  maximum  sum  beyond  which  the 
company  may  not  be  held  liable  for  the  loss  or  damage  occasioned 
by  any  one  accident.  One  of  the  conditions  of  these  policies 
is  that  the  insurance  company  will  defend  and  protect  the  employer 
against  suits,  and  will,  if  possible,  secure  an  adjustment  and  settle- 
ment of  each  claim.  There  is  complaint  that  the  companies  are 
sometimes  dilatory,  niggardly  and  unfair  in  their  settlements. 
The  companies  are  between  two  fires;  namely,  the  demand  by 
employers  for  lower  rates  and  the  demand  for  sufficient  compensa- 
tion from  injured  workingmen  or  the  families  of  those  who  have 
been  killed.  The  practice,  no  doubt,  is  influenced  by  both  of  these 
conditions.  It  may  be  taken  as  a  certainty  that,  as  soon  as  the 
employer  has  become  accustomed  to  insurance,  he  will  ordinarily 
favor  liberal  treatment  of  his  employes  who  seek  to  enforce 
their  claims,  since  he  no  longer  has  any  direct  financial  interest 
in  the  matter.  In  other  words,  he  is  not  likely  to  be  so  eager 
that  the  claim  be  disallowed,  or  that  if  allowed  it  be  for  a  small 
amount,  as  when  it  is  to  be  paid  directly  out  of  his  own  funds. 

THEORY  OF  WORKMEN'S  COMPENSATION 
As    has    been    noted    the   principle   which   has   now   been 
adopted  in  most  civilized  countries  of  the  world,  almost  wholly 


WORKMEN  S   COMPENSATION 

within  the  last  twenty-five  years,  is  entirely  different  from  the 
above.  It  may  be  briefly  described  as  follows:  In  carrying  on 
any  given  industry  for  the  benefit  of  those  who  will  enjoy  the 
products  or  the  services  supplied  thereby,  there  will  be,  on  the 
whole,  taking  into  account  all  the  various  establishments  engaged 
in  those  industries,  a  more  or  less  stable  aggregate  amount  of  loss 
and  damage  occasioned  by  industrial  accidents.  While  each 
particular  accident,  considered  by  itself,  might  appear  to  have  been 
preventable  if  an  extraordinary  degree  of  caution  had  been  exer- 
cised, it  will  also  appear,  when  the  losses  are  spread  over  the  entire 
industry,  and  especially  when  the  experience  of  many  years  is 
combined,  that  there  is  a  more  or  less  steady  ratio  between  the 
financial  loss  and  the  financial  value  of  the  entire  product,  indi- 
cating that  accidents  are  governed  by  laws  of  probability  and  are 
to  a  certain  degree  inevitable. 

In  other  words,  this  loss  or  damage,  as  much  as  loss  or 
damage  by  destruction  of  material,  by  wear  and  tear  of  machinery, 
etc.,  is  a  part  of  the  cost  of  the  commodity  in  the  production  of 
which  the  workingman  was  employed  at  the  time  the  accident 
took  place. 

It  follows  that  the  workingman,  or  his  family  in  event  of  his  death, 
should  be  compensated  in  a  reasonable  amount  for  the  consequences 
of  an  industrial  accident;  not  in  order  that  some  one  shall  be  mulcted, 
on  the  ground  that  he  was  at  fault,  but  in  order  that  this  portion  of  the 
cost  of  the  product  or  services  shall  not  be  transferred  from  the  em- 
ployer and  the  ultimate  consumer  to  the  workingman  and  his  family, 
crushing  them  in  many  cases,  and  eventually  shifting  the  burden  to 
the  community  in  the  most  undesirable  form  of  charity. 

Under  this  theory,  if  justly  regulated,  there  would  be  and 
there  should  be  no  extraordinary  and  certainly  no  excessive 
verdicts.  Compensation  should  be  governed  by  business  prin- 
ciples. 

The  careful  manner  in  which  countries  adopting  the  com- 
pensatory principle  have  provided  that  compensation  shall  be 
proportioned  to  the  actual  financial  loss  to  the  injured,  is  worthy 
of  special  notice.  The  unit  upon  which  the  right  to  recover  is 
founded  is  the  actual  wage,  the  current  earnings  of  the  workman.  If 
his  disability  is  total,  compensation  is  fixed  at  a  certain  percentage 

9 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

of  his  current  wages,  varying  from  50  per  cent  in  Great  Britain 
to  as  high  as  70  per  cent  in  Holland.  If  his  injury  is  partial, 
the  amount  of  the  diminution  of  his  earning  power  is  carefully 
determined  and  the  same  percentages  or  other  percentages  are 
applied  to  it. 

The  amount  that  may  be  claimed  in  event  of  death  by  acci- 
dent is  also  fixed  with  reference  to  current  earnings,  varying  from 
a  sum  equal  to  three  times  the  annual  gross  earnings,  as  in  Great 
Britain,  to  a  pension  to  the  widow  during  her  widowhood  equal  to 
20  per  cent  of  the  current  earnings,  plus  a  similar  pension  to 
each  minor  child,  the  whole,  however,  not  to  exceed  60  per  cent, 
as  in  Germany.  A  much  more  complete  description  of  each  of 
these  rates  of  compensation  is  given  hereafter,  in  the  pages  de- 
voted to  separate  countries. 

The  great  economy  in  administering  this  system,  as  com- 
pared with  employers'  liability  insurance  based  upon  the  theory  of 
negligence,  is  apparent.  The  fact  of  liability  is  certain  if  the  work- 
man is  injured  while  at  work  and  is  not  wilfully  at  fault,  and  the 
amount  of  liability  is  usually  readily  ascertainable.  Under  the 
present  laws  in  most  states  of  the  United  States,  on  the  contrary, 
the  employer's  liability  is  usually  a  difficult  matter  to  determine. 
If  he  is  liable,  the  amount  of  his  liability  is  so  difficult  to  ascertain 
that  juries  give  all  sorts  of  verdicts,  sometimes  absurdly  low  and 
often  unconscionably  high. 

The  expense  of  adjusting  claims,  determining  the  liability 
and  the  amount  of  it,  is  proportionately  less  under  the  compensa- 
tory plan.  This  means  that  a  much  larger  proportion  of  the  money 
actually  paid  by  employers  on  account  of  industrial  accidents  goes 
into  the  pockets  of  those  who  have  suffered,  instead  of  being  paid 
as  heretofore  for  the  services  of  lawyers  and  adjusters. 

Under  the  new  system,  workingmen  are  called  upon  to  bear 
a  considerable  portion  of  the  entire  damage,  in  that  compensation 
is  only  from  one-half  to  two-thirds  the  loss  in  wages.  A  man's 
family  may  sometimes  suffer  in  addition  a  considerable  financial 
loss  in  cost  of  care  and  of  cure.  Victims  of  industrial  accidents, 
therefore,  even  under  this  system,  go  without  full  compensa- 
tion, though  undoubtedly  in  the  aggregate  a  much  larger  sum 
is  realized  for  them  and  so  distributed  as  to  relieve  all.  In  addi- 

10 


WORKMEN  S  COMPENSATION 

tion,  the  relief  comes  promptly,  reliably,  and  in  most  cases  at 
frequent  intervals,  and  in  relatively  small  amounts. 

It  is  frequently  urged,  however,  that  there  is  something 
true  and  of  permanent  value  in  the  two  theories  which  have  grown 
up  under  the  application  of  the  principles  of  the  theory  of  negli- 
gence and  the  liability  of  the  employer;  namely, 

First,  that  gross  negligence  on  the  part  of  an  employer  ought 
to  be  penalized  heavily,  and  that  he  should  not  be  permitted  under 
such  circumstances  to  escape  compensating  the  damage  which 
has  resulted  from  his  culpable  fault.  In  Great  Britain  this  has 
been  recognized  by  leaving  the  old  Employers'  Liability  Law  in 
force,  concurrently  with  the  Workmen's  Compensation  Act,  so 
that  action  may  be  had  under  the  former  instead  of  under  the 
latter.  It  is  also  provided  that  if  a  verdict  is  not  given  under 
the  liability  law,  the  judge  shall  nevertheless  award  the  amount 
to  which  the  injured  [is  entitled  under  the  compensation  act. 
Notwithstanding  this  exceedingly  liberal  provision  of  the  act, 
comparatively  few  claims  have  been  made  under  the  old  em- 
ployers' liability  law  and  very  few  have  been  sustained. 

Second,  that  compensation  should  not  be  paid  if  the  em- 
ploye himself  has  been  grossly  negligent.  This  has  also  caused 
an  exception  to  be  made  in  at  least  one  country.  In  France, 
if  gross  negligence  on  the  part  of  the  employe  is  shown  clearly 
to  have  caused  the  accident,  there  is  no  liability.  Although 
the  law  has  been  in  force  for  several  years,  this  defense  up  to  the 
present  time  has  availed  in  less  than  a  dozen  cases  in  the  entire 
nation. 

One  other  objection  remains  to  be  mentioned.  The  em- 
ployer claims  that  he  now  pays  in  the  wages  which  his  employes 
receive,  an  equivalent  for  the  risk  of  industrial  accidents  (other 
than  those  due  to  the  employer's  fault)  to  which  the  employe 
exposes  himself  in  the  course  of  his  work,  and  that  to  require  the 
employer  to  compensate  for  all  such  damages  is  to  require  him  to 
pay  a  second  time. 

It  is  not  possible  to  prove  that  the  employer  pays  for  risk 
or  that  compensation  for  injury  enters  into  wages.  On  the  con- 
trary, there  are  many  reasons  for  believing  that  this  is  not  the  case- 
Several  of  the  most  poorly  paid  employments,  among  which  may 

ii 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

be  mentioned  tunneling,  mining,  ditch-digging  and  the  like,  are 
known  to  be  the  most  dangerous.  In  these,  wages  appear  to  be 
determined  in  the  usual  way,  by  supply  and  demand.  Unskilled 
employment  is  the  most  poorly  remunerated  because  of  the  large 
proportion  of  persons  who  can  perform  that  kind  of  work.  They 
are  compelled  to  resort  to  it  because  of  the  scant  demand  for 
higher  labor  or  because  they  can  do  no  other.  It  would  seem  that 
risk  could  not  affect  wages  of  this  lower  grade  of  labor  unless  other 
trades  were  undermanned,  thus  absorbing  those  who  had  sought 
its  ranks  because  of  unemployment  elsewhere,  or  unless  a  consider- 
able number  of  those  who  can  do  only  this  kind  of  work  should 
refuse  to  engage  in  it  on  account  of  hazard.  Even  then,  increase 
in  wages  to  compensate  for  this  hazard  would  be  unlikely  to 
increase  the  number  of  workingmen,  as  those  who  decline,  do  so 
from  fear  of  pain,  maiming  and  possible  death,  and  not  from  fear 
of  financial  loss. 

Even  if  it  were  true,  however,  that  the  employer  now  pays 
in  the  aggregate  full  compensation  in  higher  wages  for  the  in- 
juries occasioned  by  industrial  accidents,  it  would  not  prove  that 
the  new  system  is  wrong  in  principle.  On  the  contrary,  when 
closely  examined,  it  would  be  a  confession  and  an  acknowledg- 
ment that  the  old  system  is  wrong  and  should  be  discontinued. 
When  this  has  taken  place  wages  would,  in  the  opinion  of  such  as 
hold  this  view,  readjust  themselves,  so  that  the  employer  would 
not  be  required  to  compensate  the  second  time. 

For  the  purpose  of  argument,  however,  it  may  be  assumed 
that  an  employer  of  many  workmen  desires  to  have  an  accurate 
knowledge  of  the  aggregate  wages  required  to  be  paid  in  his 
establishment  to  cover  the  value  of  services  rendered  and  the 
aggregate  compensation  to  be  paid  his  workmen  for  damages  due 
to  industrial  accidents.  He  wishes  these  to  be  adequate  and 
equivalent  to  the  risks  they  run.  To  demonstrate  this,  he  might 
well  offer  to  pay  currently  from  week  to  week  wages  equal  to  the 
full  value  of  his  employes'  services  according  to  their  ordinary  mar- 
ket value;  and  at  the  end  of  the  year  render  a  careful,  conscien- 
tiously prepared  account  of  the  financial  losses  to  employes 
and  their  dependents  because  of  deaths  and  injuries  due  to  in- 
dustrial accidents  in  his  establishment.  Upon  such  accounting 

12 


WORKMEN  S   COMPENSATION 

he  would  offer  to  divide  among  all  the  employes,  in  proportion 
to  the  wages  paid  them,  an  amount  equal  to  this  aggregate, 
as  additional  compensation. 

In  such  case,  he  would  have  done  precisely  what  it  is  now 
sometimes  imagined  that  he  does ;  namely,  compensated  his  work- 
men, as  a  class,  for  the  risks  they  run  in  his  employment.  Inci- 
dentally, he  would  be  paying  compensation  (as  he  now  does,  if  it  is 
a  fact  that  compensation  is  included  in  wages),  not  to  the  wretched 
unfortunates,  the  injured  workmen  and  the  families  of  workmen 
who  have  lost  their  lives  in  his  service,  but  to  all,  comprising  the 
much  larger  number  who  have  suffered  no  such  loss.  If  the 
wages  include  compensation  for  risk,  the  foregoing  method  of  dis- 
tributing the  compensation  must  be  what  is  actually  taking  place, 
indirectly. 

The  foregoing  are  the  principles  of  the  new  method  of  deal- 
ing with  industrial  accidents  which  have  been  adopted  in  all  im- 
portant countries  of  Europe,  and  which  have  given  an  enormous 
impetus  to  the  study  and  development  of  insurance  against  the 
consequences  of  industrial  accidents. 


II 

INSURANCE  OF  EMPLOYERS  IN   PRIVATE  COMPANIES 

UNDER  laws  of  the  type  discussed  in  the  foregoing  section, 
which  are  still  to  be  found  in  most  of  the  states  of  the 
United  States  and  which  hold  the  employer  liable  only  for 
damages  due  to  his  own  negligence,  insurance  of  employers  against 
the  financial  consequences  of  such  liability  has  undergone  a  great 
development.  This  insurance  has  been,  in  the  main,  though  not 
exclusively,  in  stock  and  private  companies  as  distinguished  from 
state  institutions.  Before  any  considerable  business  had  been  built 
up  in  stock  companies,  however,  or  insurance  in  them  had  as- 
sumed any  great  degree  of  importance,  the  principle  that  this 
hazard  could  best,  both  from  the  standpoint  of  the  employer  and 
from  that  of  the  state,  be  taken  care  of  by  means  of  insurance, 
had  been  adopted  in  Germany,  under  the  pressure  of  the  adminis- 
tration headed  by  Bismarck. 

Under  laws  based  on  the  old  principle  of  negligence,  insur- 
ance of  the  employer  is  dangerously  near  to  being  unlawful  and 
contrary  to  public  policy.  The  theory  of  the  liability  of  the 
employer  is  that  he  has  perpetrated  a  wrong  through  his  negligence 
and  is  being  held  accountable  for  the  consequences  of  this  wrong. 
It  is  against  the  declared  public  policy  of  all  civilized  states  that 
any  man  should  be  permitted  to  insure  against  the  consequences 
of  his  own  crime,  misdemeanor  or  wrong.  That  is  to  say,  the  state 
should  not  permit  a  man  to  insure  against  the  damages  which  he 
would  suffer,  civilly  or  criminally,  for  having  committed  an  un- 
lawful act.  Particularly  is  this  true  if  the  unlawful  act  is  one  which 
is  prohibited  by  statute  or  under  the  common  law  as  a  crime,  a 
misdemeanor,  or  even  such  a  wrong  as  is  called  a  tort. 

There  are  now  several  exceptions  to  this  rule,  however,  in  the 
decisions  of  courts  and  in  statutory  provisions  in  various  civilized 
countries.  The  validity  of  life  insurance,  even  though  the  insured 
be  killed  while  committing  a  violation  of  law  or  be  executed  for 

14 


INSURANCE    OF    EMPLOYERS    IN    PRIVATE    COMPANIES 

violating  the  law,  or  if  the  beneficiary  has  been  convicted  of  the 
murder  of  the  insured,  has  been  upheld  by  some  courts.  Another 
decision  has  refused  to  interfere  with  insurance  of  employers 
against  the  financial  consequences  of  their  negligence.  The  insur- 
ance of  any  person,  firm  or  corporation  against  general  liability  for 
the  consequences  of  negligence  on  account  of  which  persons  not  em- 
ployes have  suffered,  has  also  been  permitted  without  interference. 
Employers'  liability  insurance  under  the  negligence  laws  in- 
demnifies the  employers  in  two  ways : 

(1)  By  actually  paying  whatever  the  employer  is  found  to 
be  liable  for,  either  upon  an  adjustment  of  the  claim  or  upon  its 
adjudication. 

(2)  By  paying  the  expenses  of  adjustment  or  by  conducting 
the  defense  and  paying  expenses  thereof,  in  case  a  suit  at  law  is 
brought. 

In  practice  also,  the  services  of  the  company  in  making  the 
adjustment  are  virtually  a  part  of  the  indemnity.  The  employer 
is  not  merely  relieved  from  the  expense  of  the  adjustment  or  of  the 
suit,  but  to  a  large  degree  from  the  personal  responsibility  of 
conducting  it.  There  has  been  very  general  complaint, — more 
against  some  liability  insurance  companies  than  others,  according 
to  their  relative  liberality  of  settlement, — about  procedure  in  the 
matter  of  adjusting  and  resisting  claims.  Charges  have  also  been 
made  of  discrimination  against  certain  classes  of  workingmen  in 
determining  rates  of  premium. 

The  complaint  in  regard  to  adjustment  is  similar  to  that 
made  against  employers;  namely,  that  as  a  condition  to  prompt 
settlement,  hard  bargains  are  driven  with  injured  workmen  or  the 
families  of  workmen  who  have  been  killed,  at  a  time  when  they 
are  ignorant  of  their  rights  or  the  seriousness  of  the  injuries,  and 
are  usually  in  great  and  pressing  need  of  funds  to  meet  the  ex- 
traordinary expenses  incurred  under  these  conditions. 

It  is  also  alleged  that  the  threat  of  resistance  in  the  courts 
is  used  with  great  effect,  it  being  known  that  the  resources  of  these 
insurance  companies  are  large,  and  that  their  skill  in  obtaining 
adjournments  and  appeals,  as  well  as  in  formulating  defenses  and 
marshalling  witnesses,  corresponds  to  the  magnitude  of  their 
resources.  In  consequence,  it  is  stated,  it  is  common  for  the  com- 

'5 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

pany  to  refuse  anything  but  a  very  small  settlement,  even  though 
it  is  well  aware  that  it  has  no  defense  and  that  the  claim  is  a  good 
one  for  a  large  amount. 

In  some  countries,  the  charge  has  been  pressed  that  these 
insurance  companies,  competing  with  one  another,  discriminate 
against  older  workingmen,  on  the  ground  that  they  are  more  liable 
to  accidents  than  younger  men  and  that  injuries  to  them  are  more 
serious  in  their  effects;  also,  that  in  some  cases  black-lists  are 
maintained  in  regard  to  certain  workingmen  who  for  one  reason 
or  another  have  been  injured  several  times  or  have  been  particu- 
larly obdurate  in  the  matter  of  settlements.  This,  doubtless,  is 
very  infrequent,  though  in  some  cases  these  charges  may  have 
some  basis  in  fact. 

The  most  serious  charge,  however,  is  that  the  business  of 
these  companies  is  necessarily  conducted  at  a  high  rate  of  expense, 
approximating  in  some  cases  one-half  the  entire  premium  income. 
It  is  true  that  part  of  this  expense,  so  far  as  the  insured  employers 
are  concerned,  is  of  the  nature  of  indemnity,  in  that  it  covers  costs 
of  adjustment  and  litigation  for  the  payment  of  which  they  would 
otherwise  be  liable.  This  merely  emphasizes  the  fact  that  under 
laws  which  require  so  much  expense  to  be  incurred,  a  large  burden  is 
imposed  upon  the  employers,  which  is  of  no  benefit  whatever  to  the 
injured  workmen.  Under  the  employers'  liability  laws  of  the  type 
to  be  found  in  most  states  of  the  United  States,  therefore,  insurance 
of  employers  against  their  liability  brings  into  plain  sight  the  fact 
that  the  principles  upon  which  the  laws  are  founded  lead  to  a  large 
waste  of  money,  so  far  as  attaining  the  object  of  relieving  the  conse- 
quences of  industrial  accidents  is  concerned.  It  should  be  men- 
tioned here  in  passing,  that  even  under  the  most  improved  German 
law  of  compulsory  insurance  in  mutual  trade  associations,  litiga- 
tion of  claims  is  considerable.  The  right  to  appeal  is  given  to  all 
employes;  the  expense  of  such  litigation,  being  borne  by  the  gov- 
ernment, is  not  included  in  the  management  costs  of  the  trade 
associations.  If  it  were,  costs  would  be  materially  increased. 
This  large  amount  of  litigation  in  Germany  is  attributed  also  to 
the  circumstance  that  the  amount  of  the  indemnity  is,  in  the  first 
instance,  determined  by  the  trade  association  of  employers  and  is, 
in  effect,  ex  parte. 

16 


INSURANCE    OF    EMPLOYERS    IN    PRIVATE    COMPANIES      . 

Another  large  element  of  expense  to  insurance  companies 
unquestionably  consists  of  occasionally  extravagant  verdicts  for 
damages,  on  the  ground  of  negligence.  Laws  of  the  type  in  force 
in  all  the  states  of  the  United  States  do  not,  as  a  rule,  place  any  lim- 
itation upon  the  amount  which  may  be  recovered,  except  in  the 
single  instance  of  claims  on  account  of  death,  which  are  limited  in 
some  states.  Neither  do  the  laws  set  forth  any  rules  by  which  the 
amount  of  the  damage  may  be  ascertained.  The  courts  have  so 
far,  in  some  important  states  at  least,  discouraged  even  the  use  of 
mortality  tables  and  expert  testimony  as  a  guide  to  juries  in  de- 
termining damages,  on  the  theory  that  the  judgment  of  the  jury 
upon  all  the  facts  of  the  case,  without  depending  upon  any 
such  standards,  should  be  expressed  in  their  verdict.  In  conse- 
quence, large  and  really  extravagant  judgments  are  sometimes 
rendered.  Any  tendency  on  the  part  of  courts  to  set  these  aside 
is  attended  by  the  great  expense  of  a  new  trial. 

As  a  result  of  this,  a  situation  has  developed  which  may  be 
restated  briefly  as  follows: 

First,  the  cost  to  employers  is  large,  on  account  of  agency 
and  management  expenses,  of  adjustment  and  litigation,  and  the 
occasionally  excessive  judgments  which  the  companies  are  called 
upon  to  pay. 

Second,  in  the  aggregate  the  returns  to  the  injured  workingmen 
and  their  families  are  only  a  small  part  of  the  amount  paid,  a  large 
share  of  payments  of  the  employers  to  the  companies  being  spent 
to  defend  suits.  It  is  likely  that  these  expenses  equal  or  nearly 
equal  the  additional  amount  which  would  have  been  required  to 
furnish  workingmen  and  their  families  with  a  reasonable  indemnity. 

Third,  in  the  altogether  too  low  aggregate  of  indemnities 
made  to  workingmen  there  is  an  unfavorable  distribution.  A  few 
knowing  their  rights  and  employing  clever  lawyers,  obtain  excessive 
damages;  the  larger  number,  however,  accept  settlements  at 
sums  far  below  their  deserts. 

Fourth,  there  is  diversion  of  a  large  portion  of  even  the  too 
low  aggregate  indemnity  paid  to  workingmen  and  their  families, 
to  lawyers  who  take  these  claims  upon  a  contingent  fee  basis. 
The  amount  of  this  fee  varies  from  one-tenth  to  as  high  as  one- 
half  of  the  whole  amount  recovered. 

2F  17 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

Notwithstanding  these  conditions,  it  is  the  general  testimony 
that,  where  insurance  has  been  introduced,  even  in  connection  with 
laws  similar  to  those  in  force  throughout  the  United  States  at  the 
present  time,  the  situation  regarding  these  settlements  has,  on  the 
whole,  been  improved  by  being  made  more  uniform.  It  has  also 
been  noted  that  employers  who  might,  if  claims  were  being  enforced 
against  themselves  individually,  take  a  peculiarly  selfish  and  ad- 
verse view  of  the  matter,  have  enlisted  themselves  on  the  side  of 
the  workingmen  when  claims  were  being  enforced  against  the  in- 
surance company.  In  consequence,  it  is  everywhere  conceded  that 
companies  which  make  a  business  of  promptly  adjusting  their 
claims  and  of  treating  claimants  with  reasonable  liberality,  are 
much  more  popular  with  employers  and  more  widely  patronized 
than  those  having  a  reputation  for  driving  hard  bargains,  of  de- 
laying settlements  and  of  compelling  claimants  to  resort  to  the 
courts.  The  fact  has  also  been  noted  that  companies  whose 
policy  is  liberal  do  not  find  it  necessary  to  charge  larger  premiums. 
While  they  may  show  a  larger  loss  ratio — though  that  is  not  always 
the  case — they  uniformly  show  a  lower  ratio  of  expense  for  ad- 
justment and  litigation  as  compared  with  the  premium  receipts. 

Employers'  insurance  of  the  type  already  described  has  now 
practically  disappeared  from  Europe  with  the  introduction  of 
workmen's  compensation  laws,  either  as  a  substitute  for  employers' 
liability  laws  which  are  thereby  repealed  or,  as  in  Great  Britain,  as 
supplementary  thereto.  As  stated  above,  the  new  statutes  pro- 
vide for  indemnification  of  workingmen  for  the  consequences  of 
industrial  accidents  on  the  principle  that  their  cost  should  fall 
upon  the  employer,  not  as  a  punishment,  nor  because  he  was 
negligent,  but  merely  to  throw  the  burden  ultimately  on  those  who 
enjoy  the  product.  It  will  be  interesting,  therefore,  to  consider 
what  changes  the  introduction  of  such  laws  have  made  in  the 
insurance  of  employers  by  stock  companies,  and  especially  whether 
evils  which  have  been  found  to  exist  in  insurance  against  liability 
for  negligence  have  disappeared  or  been  modified. 

In  all  countries  of  Europe  which  have  adopted  the  compensa- 
tion principle  in  their  legislation,  with  the  exception  of  Germany, 
Austria  and  Norway,  stock  corporations  insuring  employers 
against  their  liability  are  permitted  to  operate.  In  all  these 

18 


INSURANCE  OF    EMPLOYERS    IN    PRIVATE    COMPANIES 

countries  except  Great  Britain,  Holland  and  Sweden,  insurance  in 
certain  stock  companies,  as,  for  instance,  in  Belgian  companies  in 
Belgium  and  in  all  companies  duly  certified  by  the  national  author- 
ities in  France,  absolutely  relieves  employers  from  liability  and 
transfers  it  to  the  insurance  company,  so  that,  even  though  the 
latter  should  thereafter  fail,  the  employer  will  not  be  liable.  In  the 
latter  country,  the  risk  of  failure  of  the  companies  is  provided  for 
by  requiring  employers  to  pay  a  small  additional  premium  every 
year  into  a  special  fund  under  the  control  of  the  government.  This 
is  used  as  a  guarantee  that  insurance  companies  will  pay  all  the  in- 
demnities promised  by  them.  In  other  words,  this  fund  is  made  the 
final  guarantor,  to  the  end  that  no  injured  workingman  or  depen- 
dent shall  be  deprived  of  indemnity  by  reason  of  the  failure  of  the 
insurance  company  or  of  the  employer,  if  not  insured. 

In  Great  Britain  there  is  a  special  variation  of  this  com- 
plete exemption  from  liability,  as  follows : 

The  statute  authorizes  the  organization  of  mutual  associa- 
tions of  employes  which  must  be  declared  solvent  by  the  Regis- 
trar of  Friendly  Societies.  They  must  promise  to  their  members 
benefits  equal  in  financial  value  at  least  to  the  benefits  under 
the  Workmen's  Compensation  Act,  and  must  be  in  receipt  of  con- 
tributions from  employers  equal  to  the  fair  value  of  their  liability 
under  such  act.  If  all  these  conditions  have  been  complied  with 
and  the  association  is  properly  registered  under  the  Friendly 
Societies  Act  of  Great  Britain,  a  certificate  is  given  and  renewed 
from  time  to  time,  so  long  as  the  fund  remains  solvent.  This 
relieves  the  employer  from  liability  and  transfers  the  liability  to 
the  fund  or  association. 

Similar  provisions  for  insurance  in  mutual  societies  certified 
by  the  government  which  relieve  the  employer  from  liability  are 
to  be  found  in  Denmark,  Belgium,  France,  Italy,  Switzerland, 
Finland  and  Russia.  In  Denmark,  mutual  associations  of  em- 
ployers, formed  for  the  purpose  of  covering  employers'  liability 
only,  may  be  licensed,  and  insurance  in  these  relieves  the  employer 
from  liability.  In  several  countries,  as  has  been  seen,  insurance 
in  private  stock  or  mutual  companies  is  permitted,  if  employers  so 
prefer,  but  they  are  not  thereby  relieved  from  liability.  This  is 
true  in  Great  Britain,  except  in  the  one  case  of  industrial  funds  or 

'9 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

associations.  It  is  also  true  in  Sweden,  Holland,  Switzerland  and 
in  Italy.  In  the  last  mentioned  country,  the  employer  can  escape 
direct  liability  (which,  if  he  is  insured,  merely  means  that  he  will 
be  held  accountable  for  the  payment  of  indemnities  if  the  insurance 
company  fails)  only  by  insuring  in  a  mutual  company  to  which  the 
government  has  given  special  powers  and  privileges.  If  present 
tendencies  are  not  deceptive,  these,  sooner  or  later,  will  be  made 
the  basis  of  a  government  system,  possibly,  though  not  necessarily, 
to  the  exclusion  of  private  companies. 

In  Sweden  and  Holland,  private  companies  have  the  com- 
petition of  a  state  department  which  will  hereafter  be  described. 
It  is  enough  at  this  point  to  say  that  the  state  department  is 
obliged  to  accept  all  applications,  good  and  bad  alike,  at  fixed 
rates.  One  of  the  advantages  given  to  it  to  counterbalance 
this  disadvantage  is,  that  while  a  policy  in  a  private  company  in- 
demnifies the  employer,  he  is  entirely  relieved  from  liability  only  in 
case  he  is  insured  in  the  state  department. 

It  is  everywhere  testified,  by  government  authorities,  by 
employers,  employes  and  managers  of  insurance  companies,  that 
the  introduction  of  bills  for  workmen's  compensation  for  industrial 
accidents  was  at  first  a  very  disturbing  element,  owing  to  the  fact 
that  the  insurance  companies  had  no  accurate  knowledge  of  the 
hazards  they  were  asked  to  cover.  While  at  first  great  difficulties 
arose  about  proper  rates  of  premiums,  and  others,  not  so  serious, 
about  accommodating  the  policies  of  the  companies  to  new  condi- 
tions, the  general  result  of  legislation  has  been  good,  and  in 
nothing  is  this  more  evident  than  in  its  effect  upon  employers' 
liability  insurance.  Thus,  a  materially  larger  proportion  of  the 
premiums  paid  by  employers  is  now  directly  applied  to  the  indem- 
nification of  employes.  This  includes  reserves  which  must  neces- 
sarily be  set  up  to  meet  the  unexpired  liability  under  the  policies, 
the  accrued  but  unmatured  liability  for  annuity  payments  to  de- 
pendents or  to  those  totally  disabled,  and  periodical  sums  remain- 
ing to  be  paid  on  account  of  temporary  disabilities.  In  fact  the 
percentage  of  claims  to  premiums  varies  from  60  per  cent  to  as 
high  as  70  per  cent  or  even  75  per  cent  instead  of  from  40  per 
cent  to  50  per  cent  as  previously. 

A  very  large  reduction  has  been  made  in  the  expenses  of 

20 


INSURANCE  OF    EMPLOYERS    IN    PRIVATE  .COMPANIES 

adjustment  and  a  more  remarkable  reduction  in  those  of  litiga- 
tion. In  fact,  litigation  is  now  comparatively  uncommon  and 
when  indulged  in,  inexpensive.  Under  the  present  laws  in  Great 
Britain,  while  one  of  the  lower  courts  may  be  called  upon  to  fix 
the  amount  of  the  damage  in  case  workingman  and  company  do 
not  agree,  the  decision  of  that  court  is  summary  after  a  brief  and 
non-technical  hearing.  Fees  of  the  attorney  for  the  workingman  are 
fixed  by  law  and  taxed  by  the  court.  This  is  in  sharp  contrast 
to  conditions  that  formerly  existed  there  and  which  in  a  much 
greater  degree  still  exist  in  the  United  States. 

Extravagant  verdicts  are  unknown  in  countries  that  have 
maintained  no  vestige  of  the  old  principle  of  the  liability  of  the 
employer  for  negligence.  Even  in  Great  Britain,  where  the  old 
laws  are  not  abrogated  and  where,  in  consequence,  an  action  may 
still  be  maintained  to  hold  the  employer  liable,  such  suits  are 
relatively  uncommon,  and  few  judgments  have  been  obtained 
under  them.  The  earlier  law  is  now  rarely  appealed  to,  unless 
the  employer  has  been  guilty  of  gross  negligence,  amounting 
to  serious  and  wilful  disregard  of  the  safety  of  his  employes. 
The  defense  may  be  interposed  in  Great  Britain  that  the  em- 
ploye has  caused  the  injury  by  his  own  "wilful  act,"  the  word 
"wilful"  having  been  interpreted  to  mean  that  he  willed  the 
injury  to  himself,  or  in  other  words,  that  it  was  self-inflicted. 
This  defense  has  been  rare  and  any  effort  to  establish  it  would 
not  be  expensive  because  it  would  be  taken  account  of  in  the  same 
court  where  the  damage  was  being  fixed  and  would  be  dealt  with 
in  the  same  summary  manner.  A  decision  in  this  regard,  however, 
can  be  appealed,  and  appeals  have  sometimes  been  taken. 

In  France,  there  is  a  loophole  for  litigation  in  that  the 
employer  is  not  held  liable  if  the  employe  has  been  grossly  negli- 
gent. But,  as  has  already  been  stated,  the  cases  where  this  has 
been  alleged,  have  been  exceedingly  few  and  those  in  which  the 
allegation  was  sustained,  yet  fewer.  The  amount  of  expense 
involved,  therefore,  in  litigating  this  issue,  has  been  small. 

The  Belgian  law  relieves  the  employer  if  he  is  insured  in 
a  Belgian  company.  The  effect  of  this  special  advantage  has  been 
peculiar.  It  was  doubtless  expected  that,  in  consequence,  em- 
ployers would  all  prefer  to  be  insured  in  Belgian  companies,  and 

21 


INSURANCE    AGAINST   INDUSTRIAL    ACCIDENTS 

that  these  would  get  nearly  all  of  the  business.  This,  however, 
has  not  happened.  On  the  contrary,  up  to  the  present  time  the 
special  advantage  granted  to  Belgian  companies  has  merely  caused 
them  to  take  the  business  which,  at  the  rates  they  charged,  was 
most  profitable,  and  virtually  to  refuse  the  public  service  of  acting 
as  a  clearing  house  for  liability  for  the  vast  majority  of  Belgian 
employers.  These  latter  had  to  turn  to  employers'  liability 
insurance  companies  disposed  to  undertake  broad  underwriting, 
located  in  France,  Switzerland,  Holland  and  Great  Britain. 
Consequently,  Belgian  companies  have  demonstrated  that  rates 
charged  according  to  their  tariffs  are  in  certain  cases  exces- 
sive. They  are  likely,  it  would  seem,  to  find  that  they  have 
"killed  the  goose  that  laid  the  golden  egg."  On  the  other  hand, 
several  outside  companies  have  lost  money,  showing  that  rates  upon 
some  classes  that  they  have  insured  should  be  increased.  In 
the  end,  when  proper  adjustments  of  rates  have  been  made, 
employers  may  prefer  Belgian  companies;  but,  for  a  time  at  least, 
this  may  be  hindered  by  prejudice  against  the  home  companies 
due  to  their  unwillingness  to  insure  all  employers  and  to  the  rela- 
tively high  rates  they  have  charged  those  whom  they  have  in- 
sured. 

In  Denmark,  the  peculiar  condition  exists  that  all  private 
insurance  companies,  both  stock  and  mutual,  are  required  to 
permit  claims  against  them  to  be  adjusted  through  an  arm  of  the 
state  government,  to  which  the  supervision  of  these  companies 
and  the  adjustment  of  claims  are  both  delegated.  This  was  at  first 
exceedingly  offensive,  and  there  was  a  strong  disposition  to  resent 
it,  even  to  the  point  of  refusing  to  do  business.  It  was  apparent 
before  the  statute  was  enacted,  that  if  the  companies  carried  their 
opposition  to  the  extent  of  withdrawing  from  business,  the  state 
would  accept  these  terms  and  set  up  a  system  of  insurance  similar 
to  that  already  established  in  Norway.  Accordingly,  but  most 
grudgingly,  the  insurance  companies  yielded. 

All  industrial  accidents,  whether  the  employe  is  injured  or 
not,  must  be  reported  at  once  to  the  state  inspection  department 
which  determines  the  liability  of  the  employer  and  the  amount. 
Indemnity  is  payable  at  a  proportion  of  the  wages  of  the  employe 
during  the  continuance  of  his  disability,  or,  in  event  of  death  by 

22 


INSURANCE    OF    EMPLOYERS    IN    PRIVATE   COMPANIES 

accident,  as  a  pension  to  his  widow  during  her  widowhood,  to 
minor  children  during  their  minority,  and  to  other  dependents, 
such  as  aged  father  or  mother,  or  minor  grandchildren  actually 
dependent  upon  the  employe,  during  the  continuance  of  their 
dependency.  The  employer,  or  the  company  with  which  he  is 
insured,  is  bound  to  make  payments  according  to  this  adjustment. 
Notwithstanding  the  objections  to  the  system  at  the  outset,  it 
is  now  conceded  to  have  worked  smoothly  and,  on  the  whole, 
satisfactorily.  Determination  of  benefits  is  secured  cheaply  and 
does  not  constitute  a  part  of  the  cost  of  the  insurance.  There  is 
^  virtually  no  litigation. 

A  system  similar  to  this  is  found  in  Sweden  where,  although 
companies  are  free  to  settle  their  own  claims,  there  is  an  appeal 
to  the  state  accident  insurance  department.  This  department 
in  addition  to  its  powers  as  a  service  conducted  by  the  state, 
is  empowered  to  act  in  determining  amounts  of  claims,  par- 
ticularly as  to  the  degree  of  disability  and  its  financial  value. 
Under  the  statute,  all  questions  relating  to  indemnity  and  present' 
value  of  claims  are  referred  to  this  department  by  the  courts, 
unless  the  parties  come  to  an  agreement  approved  by  the  latter. 
In  consequence,  a  pretty  thorough  scheme  of  assessing  damages 
has  been  worked  out  in  Sweden,  and  most  adjustments  are  made 
with  direct  reference  thereto. 

In  all  countries  of  Europe  where  the  new  principle  of  work- 
men's compensation  for  industrial  accidents  has  been  accepted, 
except  Great  Britain,  benefits  to  dependents  in  the  event  of  the 
death  by  accident  of  a  workingman,  are  payable  in  pensions  or 
annuities.  Benefits  to  employes  totally  disabled  are  also  payable 
in  annuities,  except  that  in  some  countries  there  may  be,  with 
the  approval  of  the  court,  a  commutation  to  a  lump  sum  of  the 
pension  or  a  portion  of  it.  In  consequence  of  these  conditions, 
the  question  has  arisen  as  to  the  amount  of  reserves  the  company 
should  be  required  to  carry.  Even  in  Great  Britain,  where  the 
matter  of  reserve  has  from  time  immemorial  been  left  to  the  dis- 
cretion of  each  insurance  company,  publicity  only  being  required, 
a  special  act  passed  in  1907  has  provided  a  system  of  reporting  the 
assets  and  liabilities  of  companies  engaged  in  employers'  liability 
business.  While  leaving  a  large  measure  of  freedom  in  the  matter 

23 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

of  the  reserves  to  be  carried,  the  act  requires  publicity  as  to  how 
much  the  reserves  for  benefits,  payable  throughout  life,  fall  short 
of  the  present  value  of  these  benefits,  reckoned  by  a  certain  stan- 
dard set  up  by  the  government.  The  effect  of  this  cannot  now  be 
foreseen;  but  it  is  expected  that  publicity  will  virtually  make 
the  standard  set  up  by  the  government  a  minimum  instead  of  a 
maximum  standard  for  companies  which  desire  to  command  the 
confidence  of  employers  and  the  people  generally. 

The  state  inspection  department  of  Denmark  has  the  power, 
which  it  exercises,  to  fix  not  merely  the  amount  of  benefits  but 
the  reserves  which  must  be  carried  to  protect  them;  in  other 
words,  to  fix  not  only  the  amount  but  its  present  value.  Belgium 
gives  similar  authority  to  a  state  commission  upon  which  serve 
some  of  the  most  distinguished  actuaries  of  that  country.  In 
Holland,  this  authority  is  virtually  conferred  upon  the  state  in- 
surance department,  which  is  also  a  competitor  of  the  private 
companies,  in  that  the  private  companies  must  maintain  with  the 
former  a  reserve  equal  to  the  present  value  of  definitely  fixed 
permanent  benefits,  according  to  a  standard  determined  by  the 
state  insurance  department  itself.  In  Sweden,  there  is  no 
definite  standard  fixed  by  law  and  no  power  in  the  state  insur- 
ance department  to  impose  one;  but  private  companies  are 
given  the  right,  in  any  particular  case  of  permanent  disability, 
to  pay  into  the  state  department  the  present  value  of  benefits 
as  fixed  by  that  department,  and  thereby  be  entirely  released 
from  liability. 

It  will  hereafter  be  seen,  in  discussing  compulsory  mutual 
associations  of  employers  for  insurance  against  liability,  that  the 
disposition  on  the  part  of  mutual  societies  to  carry  too  small 
reserves  is  found  everywhere  and  is  one  of  the  perils  which  must 
be  guarded  against  in  substituting  that  form  of  insurance  for 
insurance  in  stock  companies. 

Wherever  insurance  against  the  compensation  of  workmen 
for  industrial  accidents  has  been  taken  in  stock  companies  and  is 
not  supplemented  by  sickness  insurance  enforced  by  law,  a  great 
deal  of  expense  and  trouble,  as  well  as  a  substantial  amount  of 
loss  resulting  from  all  sorts  of  minor  claims,  is  found.  This  is  not 
so  true  where  benefits  begin  only  after  several  weeks  of  disability, 

24 


INSURANCE    OF    EMPLOYERS    IN    PRIVATE    COMPANIES 

or  where  sickness  insurance  to  cover  the  first  weeks  of  disablement 
is  maintained  by  workmen  or  by  workmen  and  employers  together. 
This  fact  must  always  be  taken  into  account  in  making  com- 
parisons between  the  expenses  of  management  of  stock  companies 
engaged  in  this  business  when  benefits  are  payable  from  the 
beginning  of  disablement  and  there  is  no  sickness  insurance,  and 
the  expenses  of  state  departments  or  of  mutual  associations 
of  employers,  when  liability  insurance  is  so  limited  and  supple- 
mented. 

In  Sweden,  Holland  and  Belgium  employers'  liability  insur- 
ance companies  are  exposed  to  the  direct  competition  of  state 
insurance  departments  which  are  obliged  by  law  to  insure  all  em- 
ployers who  apply.  In  France  also,  the  statutes  make  a  similar 
provision  for  insurance  on  the  part  of  the  state;  namely,  em- 
ployers may  insure  against  their  liability,  including  the  first 
weeks  of  disablement,  but  as  this  provision  does  not  cover  the 
liability  for  temporary  disability,  it  has  been  little  used  by  em- 
ployers. The  extent  to  which  this  competition  on  the  part  of  the 
state  has  interfered  with  the  operation  of  private  companies  will 
be  discussed  in  a  later  chapter. 


25 


Ill 


REFERENCE  has  already  been  made  to  the  existence  in 
various  countries   of  insurance  for  workingmen  against 
accidents,  by  means  of  establishment  funds  to  which  em- 
ployers contribute.     Mention  has  been  made  also  of  the  existence 
of  mutual  companies  composed  of  employers,  but  the  subject  has 
not  been  generally  discussed. 

In  Great  Britain  much  was  originally  expected  of  establish- 
ment funds.  A  number  of  these  were  in  existence  before  the 
Workmen's  Compensation  Act  of  1897  was  passed,  and  needed  only 
to  be  reorganized  so  that  the  provisions  of  the  act  would  apply. 
This  was  generally  done.  It  was  anticipated  that  many  new  funds 
would  be  created  and  that  these  would  prove  to  be  the  chief 
solution  of  the  compensation  problem.  Such,  however,  has  not 
been  the  case.  There  are  many  reasons  for  this,  among  which 
are  the  following:  The  act  required  that  all  such  schemes  should 
be  solvent  and  be  maintained  so  under  penalty  of  the  em- 
ployer again  becoming  liable.  Solvency  is  ascertained  at  least 
every  five  years  by  valuation  of  an  actuary  whose  certificate  is 
acceptable  to  the  Registrar  of  Friendly  Societies.  Some  of  the 
funds  could  not  comply  with  this  requirement,  and  others, 
because  of  the  smallness  of  their  membership,  were  found  upon  re- 
valuation not  to  be  solvent.  Under  such  conditions  the  employer 
either  had  to  make  good  the  impairment  or  abandon  the  scheme. 

Prior  to  the  enactment  of  the  Workmen's  Compensation 
Act  the  employer  very  commonly  required  his  workmen  to  con- 
tribute most  or  all  of  the  cost  of  the  insurance,  holding  himself 
responsible  only  for  the  collection  and  safekeeping  of  the  funds. 
Some  employers  were  more  liberal,  making  a  considerable  donation 
but  very  few  of  them  were  contributing  as  liberally  as  is  now 

26 


INSURANCE    OF    EMPLOYERS    IN    MUTUAL   ASSOCIATIONS 

required  to  free  them  from  liability  under  the  terms  of  the 
new  act. 

It  often  happened,  too,  that  benefits  which  such  establish- 
ment funds  had  been  paying,  were  found,  upon  examination 
by  the  Registrar  of  Friendly  Societies,  to  be  not  equivalent  in 
value  to  those  under  the  Workmen's  Compensation  Act,  and  on  this 
ground,  it  could  not  come  within  the  provision  of  the  act  and  en- 
title the  employer  to  exemption  unless  the  fund  was  put  on  a  dif- 
ferent basis.  Most  of  the  existing  establishment  funds,  however, 
were  so  far  reformed  as  to  provide  the  desired  exemption,  though 
not  a  few  of  them  have  since  been  obliged  to  dissolve.  Under  these 
conditions,  there  was  not  much  encouragement  for  the  formation  of 
new  funds,  the  few  instances  in  which  they  have  been  established 
being  due  rather  to  altruistic  sentiment  than  to  business  policy. 

An  important  difficulty  in  the  way  of  founding  new  funds 
and  even  of  maintaining  those  already  in  existence  has  been  the 
almost  universal  opposition  of  the  trade  unions.  It  is  alleged 
that  some  employers  have  endeavored  to  keep  their  employes 
out  of  the  unions  and  have  offered  the  benefits  and  advantages 
of  the  establishment  funds  as  a  means  of  weaning  them  away. 
Trade  unions  themselves  have  been  furnishing  sickness  and 
accident  benefits,  and  the  workman  who  pays  his  share  into  the 
establishment  fund  is  often  unwilling  to  keep  up  his  trade  union 
membership  (especially  when  the  employer  is  not  bound  by  con- 
tract to  employ  union  men  only) ;  he  considers  it  an  unnecessary 
additional  expense.  Whenever  an  enlightened  employer  has  dealt 
with  the  matter,  without  too  sharp  an  eye  upon  the  advantage 
to  be  gained  for  himself,  and  has  planned  the  fund  on  lines  so 
broad  and  beneficial  that  no  reasonable  ground  for  complaint 
could  be  found,  the  scheme  has  succeeded.  Whenever  the  con- 
trary attitude  has  been  taken,  opposition  has  been  encountered. 
Thus,  in  connection  with  certain  mining  industries  it  has  literally 
been  a  fight  to  the  finish  with  great  losses  on  both  sides,  and  the 
end  is  not  yet.  The  trade  unions  in  many  instances  appear  to 
be  justified  in  their  statement  that  these  funds  have  been  used  to 
disrupt  them  and  to  pretend  to  supply  wants  they  were  caring  for. 
In  any  event,  whatever  the  cause,  this  method  of  dealing  with 
the  insurance  problem  connected  with  industrial  accidents  has 

27 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

not  been  especially  successful  in  Great  Britain;  this  notwithstand- 
ing the  fact  that  it  was  well  under  way  before  the  new  statutes 
were  enacted,  and  that  special  provision  was  made  in  such  laws 
for  this  method. 

In  other  countries,  the  establishment  fund  has  had  a  large 
measure  of  success.  This  is  particularly  true  in  Germany  in  the 
cases  of  the  Krupp  works  at  Essen,  in  the  two  leading  steamship 
companies,  and  in  the  shipping  and  mining  industries;  also  in  the 
mining  industries  of  France,  and  in  particular  cases  elsewhere. 

Not  much  has  been  done  in  Great  Britain  under  the  Work- 
men's Compensation  Act,  in  the  matter  of  organizing  mutual 
liability  insurance  associations  of  employers.  There  is  no  pro- 
hibition nor  any  special  encouragement  of  it  in  the  act.  The 
employer  is  not  exempted  from  liability  because  of  insurance 
either  in  a  stock  or  in  a  mutual  company.  The  only  purpose  of 
organizing  a  mutual  company  under  such  conditions  is  based  on 
the  hope  that  insurance  may  thus  be  had  at  a  lower  cost.  British 
employers  are  not  greatly  disposed  to  federate  for  any  purpose 
except  for  an  actual  merger  of  their  interests.  This  attitude, 
no  doubt,  is  partly  due  to  a  fixed  business  policy. 

On  the  continent  there  is  a  much  stronger  disposition 
among  employers  to  co-operate  in  mutual  associations  for  the 
purpose  of  covering  their  liability  under  the  laws.  Large  mutual 
associations  are  to  be  found  in  the  principal  countries,  and  in 
some  of  them,  as  will  be  seen  hereafter,  they  exist  to  the  ex- 
clusion of  all  other  methods  of  furnishing  insurance.  In  Den- 
mark, where  the  state  frees  the  employer  or  the  insurance 
company,  as  the  case  may  be,  from  the  burden  of  inves- 
tigating claims,  fixing  the  amount  of  damage,  etc.,  a  certain 
large  mutual  insurance  association  enjoys  a  great  proportion 
of  the  total  employers'  liability  business  of  the  country.  In 
Sweden  there  are  several  employers'  mutual  insurance  associa- 
tions, one  of  which  is  transacting  much  the  largest  business  in  the 
country,  with  the  exception  of  that  conducted  by  the  state  depart- 
ment. France  has  several  of  these  associations  and  their  opera- 
tions have  been  successful.  The  same  may  be  said  of  Switzerland, 
Belgium,  and  Holland,  and  is  particularly  true  of  I  taly,  where  a  large 
mutual  association  has  been  greatly  favored  by  the  government. 

28 


INSURANCE    OF    EMPLOYERS    IN    MUTUAL    ASSOCIATIONS 

In  all  these  countries  such  associations  are  operating  in 
competition  with  stock  companies  and  in  some  cases  with  state 
departments  as  well.  Insurance  is  permitted  either  in  such  an 
association,  in  a  stock  company,  or  in  a  state  department,  where 
one  exists.  Mutual  companies  hold  their  own  well  in  competition, 
but  almost  invariably  display  one  noteworthy  weakness;  namely, 
that  because  it  adds  to  present  cost,  they  are  indisposed  to  hold 
adequate  reserves  for  pensions  and  disability  benefits  payable 
throughout  the  lifetime  of  the  totally  disabled  or  the  widowhood 
of  the  wife  or  the  minority  of  children. 

Thus,  for  instance,  while  Swedish  stock  companies  engaged 
in  employers'  liability  business  cover  their  liability,  after  the 
accident  has  taken  place,  either  by  setting  up  an  adequate  reserve 
or  by  purchasing  an  annuity  from  the  state  department,  equal  to 
the  payment  to  be  made,  the  large  mutual  companies  (and  espe- 
cially the  largest  of  them  all)  refuse  to  do  this.  As  they  are  not 
required  to  make  any  special  disclosure  of  the  method  by  which 
they  arrive  at  an  adequate  reserve,  they  satisfy  themselves  by 
carrying  what  they  declare  is  "a  large  reserve."  This  case  is 
mentioned  not  because  it  is  peculiar,  but  rather  because  it  is  char- 
acteristic. It  is  found  virtually  everywhere  that  mutual  associa- 
tions of  employers  seek  to  avoid  making  larger  immediate  payments 
than  are  immediately  requisite  and  refuse  to  carry  reserves  which 
other  institutions  believe  necessary  in  order  to  maintain  solvency. 

Some  countries,  through  special  legislation,  have  made  insur- 
ance obligatory  for  employes  of  a  certain  class,  such  as  miners,  for- 
esters or  marine  employes.  This  is  true  even  in  countries  where  no 
other  classes  of  workmen  are  required  to  be  insured.  Where  such 
legislation  has  been  enacted,  insurance,  in  most  cases,  is  through 
mutual  associations  conducted  by  the  employers,  and  usually  em- 
ployes must  contribute,  though  this  is  not  always  the  case. 

Few  associations  where  insurance  has  been  made  obligatory  in 
this  manner  have  attempted  to  secure  financial  solvency  in  the 
sense  that  sufficient  reserves  are  maintained  to  provide  benefits 
payable  for  accidents  which  happened  in  previous  years.  In 
other  words,  a  characteristic  of  the  mutual  system  is,  that  neglect 
to  provide  for  ultimate  solvency,  as  if  it  were  a  thing  which 
really  should  be  avoided,  accompanies  that  system.  When  ob- 

29 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

ligatory,  however,  such  reserves  are  not  deemed  requisite  to 
solvency. 

In  two  of  the  principal  countries,  Germany  and  Austria, 
insurance  of  all  wage-earners  who  are  employed  in  production  or 
transportation  and  of  many  who  are  engaged  in  the  distribution 
of  products,  is  obligatory;  and,  so  far  as  the  consequences  of  in- 
dustrial accidents  are  concerned,  is  carried  on  through  mutual 
associations  of  employers.  Employments  are  defined  and  classi- 
fied by  law,  and  in  Germany,  each  association  contains  all  em- 
ployers included  in  that  class.  In  the  United  States  this  system 
is  often,  and  in  fact  generally,  miscalled  "state  insurance."  It  is 
really  not  state  insurance  at  all.  The  government  does  not  render 
itself  liable,  does  not  collect  premiums,  adjust  claims  or  pay  them. 
It  merely  by  legislation  furnishes  the  original  compulsion,  and  super- 
vises and  regulates  the  operations  of  these  mutual  associations. 

The  same  disposition  on  the  part  of  employers  to  avoid 
making  payments  which  shall  create  a  sufficiently  large  fund  to 
cover  benefits  to  be  paid  as  soon  as  accidents  take  place,  is  found 
among  associations  in  Germany  and  Austria  as  in  mutual  associa- 
tions of  employers  operating  under  the  voluntary  system.  There 
is  less  occasion  for  such  a  course  in  these  countries  because  the 
mutual  associations  are  not  subject  to  competition  of  other 
companies,  the  excuse  frequently  offered  where  insurance  is  vol- 
untary. In  both  cases,  insurance  in  the  beginning  appears  to  be 
cheap,  merely  because  the  full  amount  of  the  damage  is  not 
being  currently  provided  for  by  the  premiums.  In  both  cases, 
too,  insurance  appears  to  be  increasing  in  cost  because  premiums 
must  take  care,  not  only  of  the  claims  for  accidents  during  the 
year,  but  also  of  an  accumulated  amount  of  payments  for  acci- 
dents which  occurred  during  the  previous  years. 

Under  the  voluntary  system,  employers  abandon  mutual 
companies  after  this  has  taken  place  and  insure  in  stock  companies 
or  with  the  state  if  state  insurance  is  offered.  If  insurance  in  mu- 
tual associations  of  employers  is  obligatory,  however,  there  is  no 
escape  and  employers  as  a  class  must  ultimately  pay  the  premi- 
ums, even  when  they  have  reached  their  maximum.  The  Ger- 
man statisticians  and  actuaries  have  worked  this  out  very 
thoroughly  and  have  approximated  the  period  at  the  end  of  which 


INSURANCE    OF    EMPLOYERS    IN    MUTUAL   ASSOCIATIONS 

the  premiums  will  reach  their  maximum ;  and  the  most  enlightened 
German  employers  are  satisfied  to  have  the  system  go  on  in  this 
way,  saying  that  they  prefer  to  keep  the  money  in  their  business 
and  to  produce  it  only  when  it  is  needed.  They  fully  understand 
by  this  time,  even  if  they  did  not  at  first,  that  the  effect  of  this 
method  is  that  employers  whose  plants  may  have  contributed  a 
large  proportion  of  the  loss,  may  fail  and  go  out  of  business  with- 
out paying  their  fair  share  of  the  cost  of  the  insurance.  When 
all  is  said  and  done,  however,  the  ruling  passion  is  too  strong,  and 
employers  have  held  so  nearly  unanimously  to  their  opposition 
to  the  other  method  that  the  German  government,  feeling  con- 
fident that  under  its  system  of  compulsion  it  can  require  the  entire 
amount  to  be  paid,  has  not  insisted  upon  a  change  of  plan. 

In  Austria,  on  the  contrary,  although  the  laws  were  passed 
only  two  years  after  the  German  laws,  and  are  closely  similar 
in  all  essential  respects,  the  rule  was  adopted  that  premiums 
should  be  high  enough  to  provide  a  fund  adequate  for  solvency 
on  the  capitalized  basis;  namely,  that  the  present  value  of  all  bene- 
fits payable  because  of  accidents  which  occur  during  the  year,  are 
losses  for  that  year  and  should  be  covered  by  premiums  collected 
during  that  year.  Doubtless,  had  the  government  of  Austria 
conducted  this  business  itself,  it  might  have  been  able  to  enforce 
such  a  rule.  What  it  did  was  to  provide  that  these  associations 
should  be  chiefly  under  the  control  of  representatives  of  the  em- 
ployers. Even  the  officers  appointed  by  the  government  to  take 
part  in  the  management  have  been  pretty  thoroughly  in  sympathy 
with  the  employing  class.  Consequently,  these  associations  have 
always  been  found  to  be  insolvent  from  the  actuarial  standpoint,  and 
all  attempts  to  prod  the  representatives  of  the  employers,  who 
are  completely  in  control  of  the  management,  into  complying  with 
the  law  by  raising  the  premium  rates  high  enough  to  provide 
adequate  reserves,  have  so  far  been  futile. 

It  is  the  general  opinion  in  Austria,  both  among  employers 
and  officials  of  the  government  familiar  with  the  subject,  that 
there  is  no  prospect  that  this  condition  will  ever  be  changed,  unless 
the  government  consents  to  shoulder  the  entire  deficiencies  already 
existing.  It  is  problematical,  even  if  this  were  done,  whether  the 
mutual  associations  would  charge  premiums  high  enough  to  main- 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

tain  a  condition  of  solvency  for  benefits  to  be  paid  on  accidents 
which  may  arise  hereafter.  The  net  effect  of  the  Austrian  system, 
therefore,  as  compared  with  the  operation  of  mutual  associations 
of  employers  elsewhere,  appears  to  have  been  that  employers  have 
become  accustomed  to  the  idea  that  their  premiums  ought  not  to 
be  increased  in  order  to  meet  past  deficits  because  they  had  all 
along  been  of  the  belief  that  they  had  paid  from  year  to  year  the 
entire  cost  of  the  damages  of  accidents  occurring  during  the  current 
year.  Instead,  therefore,  of  facing  with  equanimity  and  a  moder- 
ate degree  of  willingness  an  increase  in  premiums,  as  employers 
are  doing  in  Germany,  Austrian  employers  are  resisting  all 
attempts  to  require  them  to  make  good  deficiencies  caused  by  the 
insufficiency  of  past  premiums;  and  they  are  pretty  certain,  even 
if  that  is  not  insisted  upon  and  the  government  supplies  the  funds, 
to  avoid  paying  adequate  premiums  in  the  future. 

Notwithstanding  the  manifest  shortcomings  thus  revealed, 
the  operations  of  mutual  associations  of  employers  have  exhibited 
great  advantages.  Some  of  these  will  be  discussed  in  subsequent 
chapters,  but  one  of  them,  economy,  is  so  clear  as  to  merit  men- 
tion at  this  time.  Even  in  competition  with  stock  companies  or, 
as  in  some  countries,  with  state  departments,  mutual  associations 
of  employers  are  famous  for  the  economy  with  which  they  are 
conducted.  When  they  do  not  have  to  seek  business  and  it  is 
brought  to  them  under  a  compulsory  system,  this  economy  is 
phenomenal.  Thus  the  average  cost  of  the  German  associations, 
operating  under  an  obligatory  system,  including  as  will  be  seen 
hereafter  a  very  fair  amount  of  expenditure  for  special  purposes 
of  prevention,  is  only  a  little  over  12  per  cent  of  the  total  income 
as  compared  with  an  expense  rate  of  from  three  to  four  times 
that  percentage  in  stock  companies;  while  in  countries  where  in- 
surance is  not  obligatory  and  where  mutual  associations  of  em- 
ployers are  in  competition  with  stock  companies  and  in  some 
cases  with  government  departments  also,  the  expenses  of  the 
mutual  societies  are  not  so  low,  being  rarely  more  than  half  as 
large  as  those  in  stock  companies.  These  large  savings  should 
enable  increased  benefits  to  be  paid  to  workingmen  and  the  fami- 
lies of  those  who  are  killed,  without  adding  to  the  aggregate  cost 
to  employers  and  the  consequent  burden  upon  consumers. 


IV 

INSURANCE  OF  EMPLOYERS  IN  GOVERNMENT 
DEPARTMENTS 

GERMANY  is  frequently  referred  to  as  the  country  which 
best  exemplifies  state  insurance.  The  fact  is  that  in 
Germany,  as  has  been  stated,  accident  insurance  is 
conducted  entirely  by  mutual  associations  of  employers  supervised 
by  the  state,  which  furnishes  little  more  than  the  compulsion  and 
the  supervision.  Even  in  Austria,  although  the  state  through  per- 
sons appointed  by  it,  takes  a  limited  part  in  the  management 
of  these  mutual  associations  of  employers,  it  has  not  accepted 
financial  responsibility.  There  are,  however,  various  govern- 
ment insurance  institutions  in  Europe  which  play  some  part 
whether  important  or  not,  in  the  development  of  insurance  against 
industrial  accidents.  They  remain  to  be  described. 

In  Great  Britain,  the  only  state  insurance  institution  is  a 
department  for  the  sale  of  life  annuities  and  life  insurance  guar- 
anteed by  the  government.  The  latter  service,  however,  has  so  far 
played  no  part  in  the  development  of  insurance  of  workingmen 
against  industrial  accidents;  and  the  former 'only  enables  an  em- 
ployer who  has  been  adjudged  liable  for  the  payment  of  a  periodical 
sum,  such  as  an  annuity,  because  of  permanent  total  or  partial  in- 
jury caused  by  an  industrial  accident  or  occupational  disease,  to  re- 
lieve himself  from  this  responsibility  by  purchasing  an  annuity  for 
this  amount  from  the  government.  The  price  of  these  annuities 
is  fixed  by  law  at  three-fourths  the  price  of  an  annuity  of  the  same 
amount  purchased  by  direct  application.  The  idea  is  that,  on  the 
average,  the  lives  for  which  such  annuities  are  purchased  are 
impaired  by  permanent  injuries  to  such  a  degree  that  one-third 
larger  benefits  can  be  supplied  for  the  sum  charged  in  cases  of 
persons  who  have  not  suffered  injury.  Employers'  liability  in- 
surance companies  are  likewise  required  to  report,  in  addition  to 
3F  33 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

a  statement  of  the  reserves  which  they  have  actually  set  aside 
for  the  protection  of  claims,  what  their  liability  would  be  on  the 
basis  of  the  provision  for  purchasing  government  annuities;  that 
is,  what  it  would  cost  to  purchase  from  the  government  annuities 
sufficient  to  relieve  them  from  obligation  to  make  such  pay- 
ments. 

A  similar  use,  though  not  founded  on  the  same  rough  and 
ready  basis  of  75  per  cent,  is  made  of  the  "Statsanstalt  for  Livs- 
forsikring"  in  Denmark.  This  is  a  state  life  insurance  and  an- 
nuity department,  and  exemption  from  direct  liability  may  be 
obtained  by  insurance  companies  or  employers  by  purchasing 
annuities  from  it.  A  like  privilege  is  enjoyed  by  the  employer  in 
France,  who  also  has  the  additional  advantage  that  he  may,  if 
he  will,  free  himself  from  all  payments  on  account  of  perma- 
nent disability,  by  insuring  with  the  government.  But  he  must 
assume  the  liability  himself  for  temporary  disability,  whether 
total  or  partial,  or  protect  himself  against  it  by  insuring  else- 
where. No  great  effort,  however,  has  been  made  to  extend  this 
branch  of  insurance.  It  appears  to  have  an  advantage  in  per- 
mitting employers  to  protect  themselves  before  injuries  have 
occurred,  instead  of  merely  purchasing  freedom  from  liability  for  a 
lump  sum  after  the  accident  has  taken  place.  But  employers  seem 
to  feel  that  if  they  must  bear  all  the  trouble  and  expense  of  pay- 
ing for  all  temporary  disability,  they  can  get  along  without 
later  insurance  against  permanent  disability.  There  is  in  France, 
also,  as  has  been  mentioned,  a  system  of  state  insurance  against 
the  insolvency  of  employers  under  obligations  to  pay  benefits  for 
industrial  accidents,  or  of  the  companies  in  which  they  are  in- 
sured. This  insurance  is  obligatory;  every  employer  must  con- 
tribute a  fixed  percentage  of  the  wages  paid  by  him  to  a  fund  main- 
tained by  the  state  for  this  purpose.  Out  of  this,  the  govern- 
ment provides  whatever  payments  are  due  if  an  employer  or  the 
insurance  company  defaults. 

In  Belgium,  full  and  complete  authority  is  granted  the  gov- 
ernment life  insurance,  annuity  and  savings  bank  department  to 
insure  employers  against  their  liability  for  industrial  accidents. 
The  law  provides,  however,  as  already  stated,  that  the  employer 
may  free  himself  entirely  from  liability  by  insuring  in  any  one  of 

34 


INSURANCE    OF    EMPLOYERS    IN    GOVERNMENT   DEPARTMENTS 

the  "recognized"  Belgian  companies.  Insurance  with  the  state  is 
thus  not  the  only  means  by  which  he  can  escape  direct  liability. 

Had  provision  been  made  for  a  separate  government  de- 
partment for  insurance  against  liability  for  industrial  accidents, 
and  had  it  been  placed  in  the  hands  of  as  capable  a  manager  as 
at  present  presides  over  the  government  life  insurance,  annuity  and 
savings  bank  department  in  that  country,  there  is  little  doubt 
that  a  flourishing  state  institution  for  this  class  of  insurance  of  em- 
ployers would  be  in  existence  there.  The  latter  institution  com- 
mands the  admiration  of  Europe  because  of  the  remarkable  results 
achieved  by  it  in  encouraging  the  accumulation  of  an  enormous 
amount  of  savings,  in  the  economical  and  sound  management  of  its 
life  insurance,  annuity  and  savings  bank  department,  and  in  the  in- 
centive given  by  the  loans  which  it  makes  to  the  building  of  work- 
ingmen's  homes.  But  the  development  of  employers'  liability 
insurance  as  a  branch  of  this  government  department  would  very 
likely  be  attended  with  serious  consequences  to  the  popularity 
and  utility  of  its  present  flourishing  branches.  All  three  of  these 
make  their  principal  appeal  to  wage-earners  who,  in  a  fourth  de- 
partment of  insurance  against  accidents,  would  appear  as  claimants. 
These  would,  perhaps,  retaliate  by  withdrawing  their  patronage 
from  the  other  departments,  incensed  by  the  precautions  which 
would,  and  indeed  must,  be  taken  in  the  settlement  of  claims  for 
disability  in  order  that  there  may  not  be  imposition  by  simulation. 

It  should  be  borne  in  mind  that  the  most  serious  menace  to 
the  success  of  insurance  against  the  consequences  of  industrial 
accidents  is  the  peril  that  enormous  sums  may  be  disbursed,  not 
in  compensation  for  actual  financial  loss,  but  merely  as  a  reward 
for  successful  imposition.  In  consequence,  accident  insurance  in- 
stitutions of  whatever  class,  whether  mutual,  stock  or  state,  to  be 
successful,  must  give  careful  attention  to  the  investigation  of  claims 
and  must  even  seem  to  be  hard-hearted.  The  danger  that  a 
state  institution  may  for  political  reasons  be  less  careful  in  this 
respect  than  others,  is  by  some  believed  to  be  great.  The  pressure 
upon  it  to  be  lax,  as  a  matter  of  policy,  would  be  enormously  in- 
creased if  this  form  of  insurance  were  conducted  by  a  department 
of  the  government  which  had  for  various  reasons  to  ingratiate 
itself  with  the  very  class  of  persons  with  whom  such  adjustments 

35 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

are  to  be  made.  There  would  be  the  alternative  peril,  either  that 
the  workmen's  compensation  department  would  be  conducted 
in  a  lax  manner  in  order  to  avoid  injuring  the  other  depart- 
ments, or  that,  if  it  were  conducted  with  commendable  firmness, 
the  other  departments  would  suffer  in  consequence.  For  these 
reasons,  together  with  the  fact  that  there  has  been  no  consider- 
able demand  for  state  insurance  in  Belgium,  as  domestic  and  for- 
eign employers'  liability  insurance  companies  supply  adequate 
protection  at  moderate  cost,  insurance  with  the  state  is  incon- 
siderable. 

In  Holland,  state  insurance  has  undergone  a  much  greater 
development.  There  a  government  department  of  the  follow- 
ing general  type  has  been  established.  The  department  offers  in- 
surance at  rates  fixed  by  itself,  and  actively  competes  for  patronage 
with  private  companies,  both  mutual  and  stock.  Only  by  taking 
an  insurance  policy  through  this  department,  however,  can  the 
employer  be  entirely  freed  from  liability.  One  of  its  further 
advantages  to  employers  is  that  however  small,  and  wherever 
located  in  Holland,  they  can  easily  insure  with  it.  They  do  not 
need  to  make  inquiries  as  to  soundness  or  solvency,  as  would  be 
necessary  in  the  case  of  private  companies  which  are  subject  to 
no  restrictions  whatever  in  Holland,  except  the  requirement  of 
publicity.  The  department  on  the  other  hand  has  no  choice  but 
to  accept  any  risk  offered,  whereas  a  private  company  might,  and 
in  many  cases  doubtless  would,  refuse  it  except  at  a  prohibitory 
rate  of  premium. 

This  department  is  expected  to  create  and  maintain  ade- 
quate reserves.  For  this  purpose,  it  is  constantly  engaged  in 
making  careful  investigations  of  cost  as  determined  by  the  actual 
percentage  of  accidents  and  the  actual  present  value  of  benefits 
payable  because  of  accidents.  The  last  is  determined  by  the 
degree  of  injury,  age  of  the  injured,  etc.,  and  calls  for  most  pains- 
taking and  elaborate  investigation.  The  idea  is  that  the  depart- 
ment, especially  in  view  of  the  competition  of  private  companies 
and  of  the  fact  that  insurance  in  it  is  not  compulsory  (insurance 
is  not  required  at  all  in  Holland),  must  place  itself,  in  respect  to 
premiums  currently  received,  in  such  a  financial  position  that 
it  can  with  certainty  carry  out  its  matured  obligations  to  loss 

36 


INSURANCE    OF    EMPLOYERS    IN    GOVERNMENT   DEPARTMENTS 

claimants,  no  matter  how  long  payments  may  continue.  Com- 
mendable efforts  have  been  made  in  this  direction,  but  it  is  con- 
ceded that  they  have  not  been  entirely  successful  for  the  following 
reasons : 

First,  the  state  department  at  the  outset,  being  compelled 
to  do  so  by  the  competition  of  private  companies,  offered  too  low 
rates  of  premiums.  It  was  expected  to  offer  lower  rates  than  pri- 
vate companies  because  expenses  would  be  less  and  a  profit  was 
not  required.  This  was  a  dubious  policy  to  pursue,  in  view  of  the 
fact  that  the  department  was  required  to  accept  all  applicants, 
whereas  a  private  company  could  exercise  a  choice  and  underbid 
for  the  risks  of  those  employers  who,  for  one  reason  or  another, 
were  likely  to  show  the  lowest  loss  ratios. 

Second,  at  the  time  the  department  was  established,  there 
were  no  Dutch  statistics  based  upon  a  comprehensive  scheme 
of  insurance.  Statistics  of  Germany  and  other  countries  were 
neither  complete  nor  entirely  applicable.  Even  at  the  present 
time  accurate  tables  showing  the  duration  of  the  lives  of  the 
injured  and  the  rates  of  disablement  are  not  to  be  had.  In  con- 
sequence, a  number  of  experiments  had  to  be  made,  and  when 
much  exact  information  had  been  obtained  it  was  found  that  the  re- 
serves, although  large,  were  by  no  means  adequate.  By  readjust- 
ments and  more  accurate  classification  of  its  rates  of  premiums 
and  more  thorough  investigation  of  the  duration  of  the  payment 
period  for  disability,  the  government  has  placed  itself  in  a  position 
where,  it  is  hoped,  it  can  prevent  recurrence  of  these  conditions  and 
gradually  bring  the  fund  to  complete  solvency. 

The  state  department  has  likewise  been  assisted  in  this 
matter  by  a  law  obliging  private  companies  to  make  certain  de- 
posits, equal  to  their  liabilities  for  reserves  for  the  current  year 
required  by  all  policies.  The  deposits  are  placed  with  the  govern- 
ment department  but  in  a  separate  fund.  This  has  had  the  effect 
of  preventing  the  continuation  of  ruinous  rates.  It  is  still  a  fact, 
however,  that  many  of  the  best  risks  are  taken  by  the  private 
companies  because,  under  the  classification  made  by  the  state 
department,  the  latter  has  not  been  able  to  offer  such  favorable 
rates  as  do  some  of  the  private  companies,  especially  when  the 
latter  are  willing  to  take  chances  as  to  the  result. 

37 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

In  Sweden,  the  state  insurance  department,  in  open  com- 
petition with  private  companies  both  stock  and  mutual,  insurance 
not  being  compulsory  there,  is  seen  to  the  best  advantage.  The 
department  has  been  established  more  recently  than  any  hereto- 
fore described.  It  was  intended,  if  it  should  prove  successful, 
eventually  to  absorb  the  entire  business  and  replace  all  private 
institutions.  It  is  generally  conceded,  even  by  managers  of 
private  companies,  that  this  expectation  is  rapidly  being  realized. 
This  is  ascribed  to  special  advantages  which  have  been  given  the 
state  department  and  special  disadvantages  imposed  upon  the 
companies.  But  even  a  very  slight  investigation  shows  that, 
while  there  may  be  some  truth  in  both  of  these  statements,  the 
success  of  the  state  department  is  chiefly  due  to  greater  efficiency 
and  economy. 

When  the  department  was  established,  it  was  put  in  charge 
of  a  man  who  resigned  the  management  of  the  largest  Swedish 
employers'  liability  insurance  company  to  assume  its  control. 
He  had  made  himself  acquainted  with  the  small  measure  of  success 
achieved  by  state  departments  in  other  countries  when  conducted 
in  competition  with  private  companies.  As  a  result,  he  mapped 
out  for  his  department  a  materially  different  course.  Since  the 
state  would  be  required  to  accept  all  applicants,  he  fixed  its  rates 
of  premiums  so  high  that  he  was  certain  there  would  be  no  loss 
on  the  business.  At  first,  this  had  the  effect  of  causing  all  the 
largest  and  most  desirable  lines  of  insurance  to  be  taken  by  private 
companies,  stock  or  mutual,  which  regularly  underbid  the  state 
department  in  'competition.  For  a  time  there  was  an  enormous 
growth  of  the  business  of  private  companies,  and  that  in  the 
state  department,  though  large,  was  chiefly  confined  to  small 
employers  and  less  desirable  lines.  The  department  seemed  to 
have  followed  a  wrong  course,  and  there  probably  were  rejoicings 
over  the  failure  of  the  state  scheme.  If  so,  these  rejoicings  were 
premature. 

For  private  companies,  the  law  required  the  state  depart- 
ment to  determine  the  extent  of  the  injury  in  cases  of  total  or 
partial  disability,  permanent  or  otherwise,  and  the  amount 
of  benefits  payable.  The  payment  of  a  prescribed  sum  to 
the  state  department  would  relieve  the  private  company,  or  the 

38 


INSURANCE    OF    EMPLOYERS    IN    GOVERNMENT   DEPARTMENTS 

employer,  from  liability,  the  state  assuming  the  payment  instead. 
This  had  the  double  effect  of  giving  the  department  special  au- 
thority in  these  matters  and  thus  preventing  its  competitors  from 
making  their  premiums  too  low,  and  of  enabling  it  quickly  to 
get  reliable  statistics  on  these  subjects,  derived  from  sufficient 
data. 

As  soon  as  it  was  clear  that  the  state  department  was  not 
losing  money,  but  was  solvent  and  showing  a  profit,  the  astute 
director  commenced  reducing  the  rates  of  premiums.  He  care- 
fully discriminated  not  merely  between  broad  classes  of  risks,  but 
also  between  the  hazards  of  individual  establishments,  demanded 
improvements  as  a  condition  for  reductions  in  rates  and  generally 
made  his  department  effective  in  decreasing  hazards  and  thereby 
reducing  the  rates. 

The  department  has  great  advantages.  It  is  charged  with 
no  expenses,  the  cost  of  conducting  its  business  being  covered  by  a 
special  appropriation  from  the  public  income  and  by  services 
performed  by  other  departments.  Its  premiums  are  payable  at 
any  post  office  in  the  kingdom  and  are  transmitted  to  it,  without 
cost  either  to  the  insured  or  to  the  department.  Its  claims  are 
paid  through  the  post  office  savings  bank  in  a  similar  manner. 
Postmasters  receive  a  small  fee  from  the  government  for  each  of 
these  services,  in  consideration  of  which  they  also  assist  in  making 
out  necessary  papers  and  render  themselves  generally  useful. 
These  administrative  expenses  fall  upon  the  state  and  are  paid  out 
of  taxes  and  not  out  of  premiums  received  by  the  department. 
It  is  therefore  not  singular  that  the  manager,  with  his  experience 
and  his  increasingly  accurate  data  as  to  necessary  premiums  under 
the  newly  defined  liability,  should  be  able  to  compete  successfully 
with  private.companies  and  gradually  to  absorb  the  business.  This 
is  taking  place.  That  the  process  is  at  present  not  complete  is  due 
chiefly  to  two  reasons :  first,  some  important  employers  have  such 
large  investments  in  the  stock  insurance  companies  that  they 
continue  their  patronage  and  influence  others  to  do  so,  even  though 
it  is  not  profitable  to  them;  and  second,  some  of  the  mutual 
companies  have  competed  successfully,  because  their  expenses  are 
low  and  they  do  not  need  to  earn  a  profit;  and  also  because  they 
are  not  maintaining  adequate  reserves,  a  practice  which  must 

39 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

ultimately  result  in  an  advance  in  their  premiums  that  will  wipe 
them  out  of  existence. 

The  kind  of  state  insurance  which  most  Americans  who  have 
considered  the  matter  at  all  have  in  mind  is  realized  only  in  Nor- 
way. There  state  insurance  is  an  absolute  monopoly,  with  its 
management  entirely  in  the  hands  of  the  government.  Norway 
was  the  first  country  to  follow  the  footsteps  of  Germany  and 
Austria  in  accepting  the  new  principle  of  employers'  liability; 
namely,  that  there  should  be  compensation  for  industrial  acci- 
dents, not  because  of  any  alleged  negligence  of  the  employer,  but 
in  order  that  all  the  costs  of  carrying  on  the  business  should  be 
borne  by  the  employer  and  so  appear  in  the  price  of  the  product. 
It  was  not  possible  in  Norway  to  establish  mutual  employers' 
associations  composed  of  a  particular  class,  in  which  insurance 
would  be  compulsory  upon  all  employers  of  that  class,  for  the 
reason  that,  with  two  exceptions,  fisheries  and  shipping,  Norway 
has  no  classes  of  employers  whose  numbers  would  be  suffi- 
cient to  furnish  a  safe  average.  It  was  necessary,  therefore,  to 
deal  with  the  matter  in  another  manner.  After  making  a  thorough 
study  of  the  operations  of  the  German  and  Austrian  systems, 
the  Austrian  system  was  accepted,  in  so  far  as  it  sought  to  provide 
for  the  collection  each  year  of  premiums  sufficient  in  amount, 
not  merely  to  pay  current  claims  arising  from  accidents  of  that 
year,  but  also  to  assure  payment  of  future  instalments  of  bene- 
fits due  to  such  accidents.  Participation  of  the  government  in 
the  management  was  not  only  accepted,  but  was  extended  so  as 
to  give  the  government  the  entire  control.  Participation  of 
employers  in  the  management  was  abandoned  largely  because 
employers  of  different  industries  would  not  be  able  to  co-operate 
as  intelligently  as  if  all  were  engaged  in  one  industry.  As  has 
already  been  noted,  this  latter  method  is  the  one  employed  in 
Germany  and  to  a  considerable  degree  in  Austria. 

The  Norwegian  insurance  department  has  been  conducted 
with  great  economy,  and  it  is  not  possible  to  praise  too  highly 
either  its  technical  management  or  its  careful  investigation  of 
statistics.  The  latter  from  the  beginning  has  been  carried  on  by 
trained  actuaries  and  is  particularly  admirable.  Cost  of  insurance 

40 


INSURANCE    OF    EMPLOYERS    IN    GOVERNMENT   DEPARTMENTS 

has  been  light  and  benefits  have  been  great,  facts  recognized  by 
both  employers  and  employes. 

Absolute  solvency,  in  the  sense  of  carrying  reserves  fully 
equal  to  all  requirements,  was  not  attained  through  collection  of 
premiums.  The  small  aggregate  resultant  deficit,  amounting  to 
about  $100,000,  was,  however,  made  good  by  the  Storthing  a  few 
years  ago,  not  without  grumblings,  but  happily  without  any  dis- 
position to  destroy  the  institution.  The  management,  however,  was 
transferred  from  an  able  actuary  and  theorist  to  a  practical  en- 
gineer who  had  just  completed  the  construction  of  the  railroad  from 
Christiania  to  Bergen,  one  of  the  most  remarkable  pieces  of  railway 
construction  in  the  world.  The  change  did  not  disturb  the  ex- 
cellent department  of  technical  investigation  and  perhaps  strength- 
ened it. 

Notwithstanding  that  the  state  insurance  department  has 
been  in  operation  for  fifteen  years,  it  has  not  been  particularly 
helpful  in  suggesting  improvements,  either  in  the  matter  of  pre- 
vention of  accidents  or  in  the  extension  of  workingmen's  insurance. 
The  same  characteristic  which  is  so  often  seen  in  state  ventures, 
namely,  a  disposition  to  make  more  effective  what  is  already  es- 
tablished, but  not  to  assume  greater  responsibility  or  extend  the 
beneficial  features  of  the  institution,  is  here  present. 

In  Italy  there  is  compulsory  insurance  but  no  monopoly. 
All  employers  must  insure;  but  they  may  do  so  in  mutual  com- 
panies, in  schemes  which  embrace  employes  also,  or  in  stock  com- 
panies. If  they  do  not  insure  in  any  of  these,  they  must  insure  in  a 
general  mutual  fund  which  the  state  supervises  and  in  a  certain 
measure  controls.  This  fund  is  not,  however,  properly  speaking 
a  state  institution,  its  management  being  in  large  part  entrusted 
to  insured  employers,  though  they  act  under  strict  supervision. 
It  differs,  likewise,  from  state  insurance  departments,  such  as  have 
been  here  considered,  in  that  the  government  does  not  openly 
and  avowedly  accept  the  responsibility  of  guaranteeing  payment 
of  the  insurance.  It  is  probable,  however,  that  if  a  condition  of 
insolvency  should  supervene,  it  would  be  found  that  the  govern- 
ment had  accepted  such  moral  responsibility  for  this  mutual 
society  that  it  could  not  do  otherwise  than  come  to  its  rescue. 

41 


WORKMEN'S    COMPENSATION   AND  ACCIDENT   INSUR- 
ANCE IN  VARIOUS   COUNTRIES 

GREAT  BRITAIN 

THE  first  important  step  in  Great  Britain  in  extending  em- 
ployers' liability  for  accidents  to  workmen  was  taken  in 
1880.  Up  to  that  time,  injured  workmen  had  recourse  to 
the  common  law,  as  is  now  the  case  in  most  of  the  states  of  the 
United  States;  and  compensation  could  be  obtained  only  upon 
unquestionable  proof  that  the  employer  was  directly  responsible. 
In  other  words  the  "fellow-servant,"  "contributory  negligence" 
and  "assumption  of  risk"  principles  governed  absolutely.  The 
law  of  1880,  following  the  lines  of  the  German  law  of  1871,  made 
the  employer  directly  liable  for  all  accidents  caused  by  defective 
works,  ways,  plant  or  machinery  or  by  the  negligence  of  persons 
in  authority  under  him.  Although  more  liberal  than  any  hereto- 
fore, this  law  proved  unsatisfactory.  It  was  too  limited  in  its 
scope,  and  actual  experience  showed  that  under  it  only  seven 
out  of  one  hundred  injured  or  killed  were  compensated. 

The  broad  principle  that  employers  must  make  compensa- 
tion to  workmen  for  injuries  received  in  the  course  of  employ- 
ment under  them  was  regarded  at  that  time  as  alien  and  un- 
English.  A  bill  was,  however,  introduced  and  championed  by  the 
present  premier,  Mr.  Asquith,  which  offered  to  workmen  about 
the  same  right  to  indemnity  in  case  of  injury  as  was  enjoyed  by 
others  than  employes.  Such  rights  were  based  upon  the  theory  of 
the  negligence  of  the  employer  and  did  away  with  the  three  condi- 
tional rules  or  defenses  enumerated  above.  This  bill  passed  the 
Commons  but  was  defeated  in  the  House  of  Lords.  The  Gladstone 
government  failing  of  re-election,  a  new  and  broader  measure  was 
presented  by  Lord  Salisbury  in  1897  whereby  the  principle  of  em- 
ployers' liability  was  unconditionally  accepted.  To  secure  indem- 
nity under  this  statute  the  workman  was  no  longer  required  to 
prove  negligence,  but  only  that  he  had  been  injured  in  the  course 

42 


GREAT    BRITAIN 

of  his  employment.  This  brought  the  situation  in  England  to 
about  the  same  point  as  that  in  Germany  under  the  law  of  1884. 

The  English  law  of  1897  applied  at  first  only  to  employes  of 
railroads,  docks,  factories,  store-houses,  stone  quarries  and  build- 
ing trades,  but  not  to  domestic  servants,  clerks,  common  or  agri- 
cultural laborers  or  sailors.  It  was  amended  in  1900  to  cover 
common  and  agricultural  laborers,  but  clerks,  sailors  and  domestic 
servants  were  still  unprotected.  Of  the  classes  not  embraced  in 
the  law  only  about  five  in  one  hundred  injured  or  killed  were  being 
compensated. 

By  a  new  enactment  in  1906,  employers'  liability  was  ex- 
tended to  virtually  all  occupations,  including  domestic  servants, 
thus  adding  about  6,000,000  to  the  number  already  protected  and 
making  a  total  of  nearly  13,000,000  workingmen  and  women 
covered  by  the  law.  The  provisions  also  were  made  clearer  and 
more  favorable  to  workmen.  According  to  the  requirements 
of  this  act,  which  is  now  in  force,  every  workman  who  is  injured 
during  working  hours  is  entitled  to  compensation  without  consid- 
eration of  time  or  place.  Employers  are  responsible  for  clerks  and 
salaried  employes  receiving  a  salary  under  £2 50  ($1217.50)  yearly; 
no  income  limit  excludes  any  class  of  manual  laborers,  to  all  of 
whom  the  law  applies.  Certain  occupational  diseases  which  can  be 
distinctly  traced  to  the  work  are  classed  with  accidents. 

The  schedule  of  compensation  is  as  follows:  In  event  of  death, 
the  sum  of  three  years'  wages,  maximum,  ^300  ($1460),  minimum, 
^150  ($730),  is  paid  to  dependents  or  a  proportionate  amount  to 
persons  partially  dependent.  If  there  is  no  direct  dependent,  the 
employer  pays  only  the  medical  and  funeral  expenses,  the  latter 
not  to  exceed  £10  ($48.70).  In  event  of  disability  exceeding  one 
week  in  duration,  half  the  average  weekly  wage,  including  value 
of  board  and  lodging,  must  be  paid,  the  maximum  being  one 
pound  ($4.87)  per  week.  If  injury  leads  to  permanent  disability, 
compensation  is  payable  weekly  throughout  life.  A  workman 
under  twenty-one  years  of  age,  though  earning  less  than  a  pound 
per  week,  including  value  of  board  and  lodging,  is  entitled  to  a 
compensation  of  10  shillings  ($2.43),  which  is  on  the  basis  of  a 
pound.  The  period  which  must  elapse  before  the  workman  receives 
compensation  was  reduced  by  the  new  law  from  two  weeks  to 

43 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

one;  and  now,  if  the  disability  lasts  more  than  two  weeks,  the 
employe  is  entitled  to  indemnity  for  the  first  week  also. 

If  the  injury  is  caused  by  the  wilful  act  of  the  workman,  he 
is  not  entitled  to  compensation  unless  the  accident  results  in  death 
or  permanent  disability.  If  caused  by  the  wilful  act  or  negligence 
of  the  employer,  the  latter  is  still  liable  to  suit  under  the  Em- 
ployers' Liability  Act  of  1880  or  under  the  common  law  or  the 
Fatal  Accidents  Act  of  1846,  and  thus  much  heavier  damages  may 
be  obtained  than  under  the  compensation  act.  If  the  claimant  is  de- 
feated, the  trial  judge  must  award  damages  under  the  Workmen's 
Compensation  Act.  Yet  such  actions  are  brought  in  less  than  one 
per  cent  of  the  cases  of  injury.  No  doubt  the  fact  that  the  statute 
and  the  court  fix  the  attorney's  fee  has  much  to  do  with  this. 

Under  the  English  law,  responsibility  rests  entirely  upon  the 
employer.  He  is  not  compelled  to  insure  as  in  Germany,  and  with 
the  sole  exception  noted  below,  he  is  not  freed  from  liability  if  he 
does  insure.  In  case  of  injury,  it  is  he  who  must  pay  the  indemnity. 
If  insured  in  a  solvent  company,  the  latter  simply  indemnifies  him. 
The  exception  is  that  employers  are  permitted  to  insure  with  stock 
companies,  mutual  associations  of  employers  or  in  friendly  soci- 
eties connected  with  their  establishment  or  industry  to  which  their 
employes  also  contribute.  Employers  must  satisfy  the  Regis- 
trar of  Friendly  Societies  that  they  make  contributions  at  least 
equal  to  the  benefits  under  the  act,  when  the  risk  is  carried 
by  an  establishment  fund.  The  benefits  are,  in  fact,  usually 
much  greater,  as  should  be  the  case  since  workmen  also  contri- 
bute. The  employer  is  released  from  liability  so  long  as  he  con- 
tributes to  the  society  and  it  is  maintained  solvent.  Valuations 
are  required  every  five  years. 

In  1905  there  were  55  such  voluntary  workmen's  associations, 
having  a  membership  of  perhaps  100,000;  they  had  not  on  the 
whole,  however,  been  very  successful  or  popular.  At  one  time 
there  was  promise  of  a  great  development  of  accident  insurance 
in  establishment  of  friendly  societies,  a  thing  apparently  much  to  be 
desired;  but  workingmen,  believing  they  were  breaking  down  the 
power  of  trade  unions,  opposed  their  further  extension.  The  societ- 
ies are,  therefore,  now  on  the  decline,  although  there  are  some 
indications  that  the  principle  may  be  extended  at  a  future  time. 

44 


GREAT    BRITAIN 

Under  the  new  act,  nearly  all  insurance  of  employers  is  in 
stock  companies.  These  have  large  resources  and  are  supposed  to 
carry  sufficient  reserves.  This  question  has  been  left  entirely  to 
the  companies'  discretion  hitherto,  there  being  no  system  of  state 
supervision;  but  such  companies  must  now  report  their  reserve 
liabilities  and  on  what  basis  computed.  They  must  also  report 
their  reserves  computed  on  the  basis  of  the  cost  of  three-fourths 
the  amount  of  the  annuities  if  purchased  from  the  government. 
British  companies  enjoy  a  high  reputation  for  strength  and  con- 
servative underwriting. 

When  the  first  compensation  act  was  passed  in  1897,  insurance 
companies  came  forward  promptly  and  offered  to  take  over  the  lia- 
bilities of  the  employers.  Not  having  adequate  experience,  their 
premium  rates  were  at  first  very  low,  in  many  cases  less  than  four 
shillings  per  pound  based  upon  their  payroll,  namely,  two-tenths 
per  cent  per  year.  The  companies  were  fairly  swamped  with  busi- 
ness; but  things  are  now  on  a  better  business  basis  and  a  more  or 
less  uniform  premium  rate  has  been  established  for  all  companies. 

The  Law,  Union  and  Crown  Insurance  Company  is  typical 
of  companies  doing  this  sort  of  accident  business.  The  following 
table  gives  a  summary  of  the  rates  now  offered  by  it. 

TABLE   I. — BENEFITS  AND  RATES   OF    THE    LAW,    UNION    AND  CROWN 
INSURANCE    COMPANY 


Benefits 

Indoor 
Servants 

(Sbil-. 
lings) 

Gar- 
deners 

(Shil- 
lings') 

Outdoor  Ser- 
vants, Coachmen 
and  Grooms 

(Shillings) 

Chauf- 
feurs 

(Shil- 
lings) 

Covering  Legal  Liability  Only. 

3* 

5 

7k 

20 

Extended  Benefits  —  in  addition  to  cover- 

ing legal  liability: 

Covering  legal  liability  and  first  week 

of  disability         

3 

6 

9 

25 

Full  wages,  including  board  wages  for 

one  month,  with  medical  expenses, 

up  to  £t)  for  any  one  accident        .         5 

7* 

10 

30 

Full    wages,    including    board  wages 

not  exceeding  205.  per  week  during 

total  disablement,  limited  to  twenty- 

six  weeks      

5 

7i 

10 

3° 

Full  wages,  including  board  wages  for 

one  month,  for  accidents  or  diseases 

with  medical  expenses  up  to  ^5  for 

any  one  accident  or  specified  disease. 

6 

8* 

12 

32* 

45 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

It  is  encouraging  to  observe  that  the  companies  report  a 
reduction  in  litigation.  Since  the  new  laws  went  into  effect, 
the  fact  and  the  amount  of  liability  are  usually  definite.  Work- 
ingmen,  however,  protest  that  settlements  are  mercilessly  unfair; 
and  expense  of  litigation  and  adjustment  is  still  a  considerable 
item  in  the  disbursements  of  the  companies. 

Up  to  the  present  time,  expenses  of  management,  including 
litigation  and  adjustment,  have  absorbed  nearly  one-half  the 
premiums.  The  industries  of  Great  Britain  are  thus  paying  in 
premiums,  if  adjustments  are  fair,  about  twice  the  net  cost,  and  if 
not  fair,  they  are  paying  in  expenses, — which  under  the  German 
system  have  been  made  unnecessary, — many  times  what  would 
enable  all  adjustments  to  be  fair  and  even  liberal.  Insurance  of 
employers  in  mutual  associations  has  developed  but  little. 

Under  the  acts  of  1897  and  of  1900,  the  premiums  were  said  to 
be  a  light  tax  on  British  industries  and  to  amount  to  a  very  small 
addition  to  the  wages.  Since  the  new,  more  comprehensive  and 
liberal  law  came  into  operation  (July,  1907)  the  rate  of  insurance 
is,  of  course,  considerably  higher.  This  is  not  wholly  the  result  of 
claims  due  to  the  additional  causes  of  injury  named  in  the  act, 
but  in  part  because  litigation  must  be  resorted  to  in  order  to  inter- 
pret the  new  act,  and  to  the  delicate  relationship  of  three  laws,  each 
based  on  a  different  principle;  namely,  the  common  law,  the  em- 
ployers' liability  statute  of  1880  and  the  recent  compensation  acts. 

Dissatisfaction  has  already  shown  itself  in  various  directions. 
Managers  of  friendly  societies,  as  might  have  been  expected,  con- 
sider the  operation  of  the  Workmen's  Compensation  Act  unfavor- 
able to  their  organizations;  first,  by  causing  persons  to  refrain  from 
becoming  members  of  such  societies,  who  argue  that  they  will 
become  disabled,  if  at  all,  only  by  industrial  accident  or  disease, 
in  which  case  the  employer  must  pay;  and  second,  by  causing 
malingering,  since  the  combined  indemnity  under  the  Workmen's 
Compensation  Act  and  the  benefit  under  the  membership  certifi- 
cate of  his  society  may  yield  the  member  more  while  disabled  than 
while  at  work. 

The  trade  unions  also  are  not  satisfied  with  the  Workmen's 
Compensation  Act.  For  several  years  in  succession  the  Congress  of 
British  Trade  Unions  has  passed  resolutions  demanding  that  state 

46 


sJU     1 

i?  s  •§       s 

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DISEASES 

Disablement 
Cases 

Amount 
Paid 
(founds) 

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47 


INSURANCE    AGAINST    INDUSTRIAL    ACCIDENTS 

insurance  be  made  compulsory  upon  all  employers.  They  base  this, 
not  upon  the  economy  of  state  insurance  but  upon  the  expectation 
that  adjustments  would  be  fairer  and  that  there  would  be  no  cases 
in  which  workingmen  or  their  families  would  fail  to  receive  in- 
demnity because  of  insolvency  of  the  employer.  They  also  allege 
that  there  is  pressure  brought  to  bear  upon  employers  to  discharge 
old  employes  in  order  to  reduce  the  risk  of  accident  and  in  conse- 
quence the  premium  rate.  The  table  on  page  47  gives  the  distri- 
bution of  industrial  accidents  and  compensations  paid  during  the 
year  1908. 

NORWAY 

Legislation  for  workingmen' s  insurance  in  Norway  dates  back 
to  1885,  when  a  royal  commission  was  appointed  to  consider  all 
questions  relating  to  the  subject.  The  commission  concluded  its 
labors  in  1890,  and  presented  a  bill  in  favor  of  compulsory  in- 
surance against  sickness  and  accident.  With  many  changes,  the 
measure  was  submitted  to  the  Storthing  in  1893,  but  for  various 
reasons  the  section  relating  to  accident  insurance  alone  was  accepted. 

This  law,  modeled  after  laws  in  operation  in  Germany  and 
Austria,  went  into  effect  July  i,  1895.  It  has  been  amended  three 
times,  but  the  amendments  do  not  materially  change  its  pro- 
visions. As  it  stands  today,  it  covers  manufacturing  only,  agricul- 
ture, fisheries  and  shipping  not  being  included.  Its  provisions 
require  that  workingmen  engaged  in  factories,  mills,  mines,  prepara- 
tion of  explosives,  etc.,  at  wages  not  exceeding  1200  crowns  ($324) 
per  annum,  must  be  insured  whether  employed  by  the  state,  the 
commune  or  a  private  employer.  Workingmen  with  an  income 
above  this  sum  are  also  included;  but  premiums  and  benefits  in 
such  cases  are  based  on  an  income  of  1200  crowns.  Insurance  for 
the  employe  must  be  taken  in  all  cases  by  the  employer  in  the 
state  department,  which  may  also  write  certain  forms  of  voluntary 
insurance.  Administration  expenses  are  paid  by  the  state  out  of 
general  taxes,  the  department  being  entirely  bureaucratic  and 
managed  by  governmental  appointees. 

The  awards  of  indemnity  are  made  by  certain  trustworthy 
men  in  each  commune,  who  are  paid  half  by  the  state  and  half  by 
the  commune.  The  cost,  outside  of  administration  expenses,  is  met 

48 


NORWAY 

by  the  employers,  the  rates  of  premium  charged  the  latter  being 
determined  by  the  risks  of  the  business  as  shown  by  experience.  If 
the  workman  dies  as  a  result  of  injury,  his  heirs  receive  50  crowns 
(113.50)  for  his  burial,  his  widow  20  per  cent  of  his  wages  during  her 
widowhood,  and  each  minor  child,  whether  legitimate  or  illegiti- 
mate, 1 5  per  cent  payable  up  to  its  fifteenth  year.  The  aggregate  to 
widow  and  children,  however,  must  not  exceed  50  per  cent  of 
the  wages.  If  both  parents  are  dead,  each  child  receives  20  per 
cent  of  the  wages,  with  the  same  maximum  for  the  aggregate.  If 
the  widow  re-marries,  she  receives  a  lump  sum  equivalent  to  three 
times  her  annuity. 

In  case  the  injury  does  not  cause  death,  the  workman  is 
entitled  after  four  weeks  to  the  cost  of  medical  treatment,  either 
at  home  or  in  a  hospital.  Sickness  insurance  societies  are  to 
pay  these  costs  for  the  first  four  weeks,  if  the  workman  is  so  in- 
sured; otherwise  the  employer  is  liable  for  them.  If  disabled, 
after  four  weeks  the  workman  is  paid  60  per  cent  of  his  wages, 
but  not  more  than  60  crowns  ($16.20)  per  month  in  any  case. 
Should  the  disability  not  be  total,  the  benefit  is  proportionately 
smaller.  The  state  department  is  permitted  to  pay  a  lump  sum, 
equal  to  the  estimated  present  value  of  benefits,  if  this  will  assist 
the  injured  to  establish  himself  in  a  self-supporting,  permanent 
occupation. 

An  extension  of  this  accident  insurance  to  foresters,  sailors 
and  certain  kinds  of  agricultural  laborers  is  contemplated.  There 
is  also  a  proposal  for  compulsory  insurance  of  fishermen,  the 
premiums  to  be  paid  partly  by  the  insured,  and  partly  by  a  tax 
on  the  fishing  industry. 

The  inner  workings  of  this  state  department  are  of  some 
interest.  As  in  Austria,  it  set  out  to  collect  premiums  sufficient 
to  set  up  capitalized  values;  but,  unlike  Austria,  being  free  from 
the  control  of  employers,  it  has  reasonably  fulfilled  this  expecta- 
tion. There  was  at  one  time  a  small  deficiency  never  exceeding 
1 1 00,000;  but  the  Storthing  made  this  good  by  an  appropria- 
tion. An  essential  difference  between  the  Norwegian  and  the 
German  system  is  that  the  former  is  on  a  reserve,  or  "capitalized 
value"  basis,  and  the  latter  on  the  assessment  basis. 

The  department  has  worked  out  the  value  of  the  hazards 
4^  49 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

from  its  own  statistics,  and  determines  what  are  fair  and  proper 
rates  of  premium.  Whether  satisfactory  to  the  insured  or  not, 
they  are  the  rates  which  must  be  paid.  The  management  is 
economical  and  efficient;  and  neither  employers  nor  employes 
desire  a  change. 

The  influence  of  this  state  department  in  the  matter  of  pre- 
vention does  not  appear  to  be  very  great.  It  may  report  defects 
to  the  department  of  factory  inspection  and  doubtless  this  is 
frequently  done;  but  if  the  attention  of  employers  is  called  to  such 
matters  by  a  government  official  instead  of  by  one  of  their  asso- 
ciates, it  is  believed  that  unless  enforced  by  an  actual  order,  the 
subject  does  not  receive  the  consideration  that  it  does  when 
coming  from  either  employers'  mutual  companies  or  sickness  so- 
cieties to  which  employers  contribute. 

Rates  of  premium  in  the  department  are  lower  for  the  same 
protection  than  those  either  in  Austria  or  Denmark.  Collections 
are  made  through  special  collectors  appointed  by  the  communes. 
The  premiums  paid  by  the  employer  are  on  the  basis  of  the  actual 
payroll.  Part  of  these  are  paid  in  advance,  part  during  the 
year  and  the  final  adjustment  is  made  at  the  end  of  the  year. 
The  employer  is  forbidden  by  law  to  deduct  any  portion  of  the 
premiums  from  wages.  On  the  other  hand,  employers  are  not 
required  to  pay  when  wages  rise  above  four  crowns  ($  i  .08)  per  day 
for  the  excess  over  that  daily  wage.  Wages  under  one  and  one- 
half  crowns  (40  cents)  per  day  are  counted  at  this  figure.  I  nspection 
is  made  and  the  business  conducted  through  branch  offices,  special- 
ists often  being  employed  to  detect  malingering  and  imposition. 

One  of  the  oldest  stock  companies  doing  accident  business 
in  Norway  is  the  "  Sigyn."  This  company  was  formerly  extensively 
patronized  by  employers  who  voluntarily  insured  their  employes 
under  the  old  law.  A  part  of  the  premium  was  contributed  by 
the  workmen,  being  deducted  from  their  wages.  Usually  this  in- 
surance did  not  relieve  the  employer  from  all  liability,  as  the  em- 
ploye could  still  recover  in  those  cases  where  the  accident  was  due 
to  the  gross  carelessness  of  the  employer.  When  the  compulsory 
insurance  law  became  effective,  however,  the  Sigyn  at  once  lost 
its  business,  which  had  grown  to  premiums  of  100,000  crowns 
(|27,ooo)  annually. 

50 


SWEDEN 


SWEDEN 

The  history  of  workingmen's  insurance  in  Sweden  is  that  of 
a  struggle  between  a  series  of  royal  commissions,  far-sighted  and 
thoroughly  up-to-date  on  the  one  hand,  and  a  conservative  par- 
liament on  the  other.  Step  by  step,  the  fight  has  been  waged; 
and  at  last  the  matter  has  reached  a  stage  which,  although  not  as 
well  advanced  as  in  some  other  European  countries,  yet  shows 
excellent  progress. 

In  the  year  1884,  a  commission  was  appointed  to  study 
workingmen's  insurance.  This  body  collected  much  valuable 
material  and  in  1888  presented  a  bill  for  obligatory  accident  in- 
surance of  the  German  type.  It  failed  of  passage.  A  new  com- 
mission was  appointed  in  1891,  with  instructions  to  devise  a  com- 
prehensive scheme  of  obligatory  workingmen's  insurance.  The 
plan  was  to  cover  only  permanent  disability,  and  workingmen  inca- 
pacitated by  accident  were  to  receive  compensation  on  the  same 
basis  as  those  incapacitated  by  sickness  or  old  age.  This  bill  was  re- 
jected as  was  also  another  somewhat  modified  bill  presented  in  1898. 

In  1901,  however,  Parliament  finally  accepted  a  measure 
presented  by  the  government  establishing  employers'  liability 
for  industrial  accidents  on  a  workmen's  compensation  basis. 
The  measure  went  into  effect  January  i,  1903.  Under  this  law, 
the  employer  is  obliged  to  indemnify  his  employe  in  case  of 
accident  not  due  to  the  employe's  gross  negligence  or  wilful  act. 
In  most  cases,  the  indemnity  commences  with  the  sixty-first  day 
after  the  accident  and  amounts  to  one  crown  (27  cents)  a  day. 
In  cases  of  permanent  disability,  an  annuity  depending  upon  the 
degree  of  impairment  of  earning  power  is  given;  maximum,  300 
crowns  (|8i)  per  annum.  In  case  of  death  the  indemnity  is  60 
crowns  ($  16.20)  for  burial  expenses,  an  annuity  of  120  crowns  (132) 
to  the  widow  and  a  yearly  allowance  of  60  crowns  ($16.20)  for 
each  child  up  to  its  fifteenth  year,  the  aggregate  to  the  family 
not  to  exceed  300  crowns  ($81)  per  annum. 

There  are  3  50,000  workingmen  in  Sweden  subject  to  this  law. 
It  applies  to  various  industrial  groups,  farmers  not  being  as  yet 
included.  Since  January  i,  1909,  it  also  covers  accidents  to  fisher- 
men. Insurance  against  this  liability  is  left  entirely  to  the  em- 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

ployer  who  may  carry  his  own  risk  or  insure  in  a  stock  or  mutual 
company  or  in  the  state  department. 

The  state  department,  according  to  present  indications,  is 
bound  within  a  short  time  to  displace  all  the  companies.  This  is 
due,  in  part,  to  certain  advantages  which  it  enjoys.  If  the  em- 
ployer insures  in  a  private  company,  he  is  not  released  from 
liability;  should  the  company  for  any  reason  fail  to  meet  the  obli- 
gation he  would  be  required  to  pay.  If  he  insures  with  the  govern- 
ment, however,  he  is  released  from  all  liability.  The  state  depart- 
ment, in  effect,  is  subsidized  by  the  government,  which  pays  its 
running  expenses.  It  has  been  extremely  fortunate  in  its  manage- 
ment from  the  beginning,  having  been  under  the  control  of  an  able 
insurance  man.  As  it  had  no  experience  to  guide  it,  however,  rates 
of  premium  were  at  first  fixed  rather  high.  Accordingly,  private 
companies  reaped  a  harvest  by  offering  lower  rates,  but  gradually 
they  have  increased  their  premiums  while  the  government  has  been 
able  to  reduce  its  own.  This  has  had  great  moral  effect;  and  it 
is  now  the  opinion  of  all,  including  the  managers  of  the  private 
companies,  that  the  government  will  soon  monopolize  the  business. 

The  state  department  is  solvent  under  the  strictest  rules  of  val- 
uation; namely,  it  has  on  hand  the  capitalized  value  of  all  pensions 
and  an  adequate  premium  reserve.  All  surplus  derived  from  pre- 
miums is  put  into  a  special  fund  to  supply  annuities,  etc.  This  de- 
partment collects  and  pays  through  the  post  office  banks,  post-r 
masters  receiving  a  small  commission  on  each  transaction;  but  it 
also  has  its  own  agents  and  canvassers  who  receive  a  commission 
of  6  per  cent. 

Another  duty  of  this  department  is  to  act  as  referee  between 
the  employer  and  his  employe.  It  determines  the  degree  of  im- 
pairment in  cases  of  partial  disability  and  also  the  amount  of 
benefit.  There  is  virtually  no  appeal  from  its  decision  in  matters 
of  adjustment.  In  consequence,  a  pretty  thorough  scheme  for 
measuring  the  value  of  various  disablements  has  been  evolved. 
Another  of  its  functions  is  to  take  over  the  liability  of  employers 
or  of  companies  for  accident  indemnities  in  consideration  of  a 
payment  equal  to  their  present  value  by  its  tables.  Most  private 
companies  relieve  themselves  from  liability  in  this  way.  The 
following  are  specimen  present  values: 

52 


SWEDEN 


TABLE    3. — PRESENT    VALUES   OF   ANNUITIES    PAYABLE   QUARTERLY 
UNDER   THE    LAW   OF    1901 


A.  Annuity  of  300  crowns  for  the  life  of  a  workman: 


Age 

'5 
20 

25 
30 


Age 


lvalue 
(Crowns) 
6,612.60 
6,375.00 
6, 1 56.90 
5,896.20 


35 
40 

45 
50 


Value 
(Crowns) 
5,578.50 
5,214.30 
4,812.90 
4,366.80 


Annuity  of  120  crowns  for  a  widow: 
Age 


Value 
(Crowns) 
2,145.00 
2,193-5° 


40 
50 


Value 
(Crowns) 
2,105.00 
1 ,829.90 


Age 

55 
60 

65 
70 


Age 


60 
70 


C.  Annuity  of  60  crowns  for  a  child  up  to  fifteenth  year: 


Value 
(Crowns) 


Age 


586.90 
559.00 
526.70 


Value 
(Crowns) 
491.00 
452.30 
410.90 
367.10 
321.10 


Age 

10 
ii 

12 
'3 

'4 


Value 
(Crowns) 
3,874.50 
3,351.30 
2,806.50 
2,259.30 


Value 
(Crowns) 
1,418.00 
969.50 


Value 

(Crowns) 

272.90 

222.30 

170.10 

115.60 

58.90 


One  of  the  competitors  of  the  state  insurance  department 
is  the  "  Bore,"  a  mutual  association  of  employers,  founded  in  1889, 
which  formerly  insured  against  liability  under  the  old  law.  This 
company  charges  graded  rates  of  premiums,  smaller  for  large 
establishments  with  many  employes.  It  exercises  a  great  deal  of 
selection  and  discrimination.  For  example,  one  policy  was  can- 
celed a  few  years  ago,  because  of  a  strike  among  the  employer's 
workmen.  If  an  accident  occurs  through  the  employer's  gross 
negligence,  the  company  holds  him  for  the  damages.  It  still 
charges  somewhat  lower  premiums  than  the  state  department,  but 
the  latter  is  constantly  reducing  its  rates  and  is  gaining  rapidly. 

There  are  in  Sweden,  besides,  some  stock  companies,  of 
which  the  "Fylgia"  and  the  "Norden"  are  good  examples.  The 
first  writes  policies  for  larger  benefits  than  those  of  the  state  de- 
partment, and  in  some  cases  the  policies  cover  not  only  accidents 
while  at  work  but  general  accidents.  This  company  has  also 
made  a  specialty  of  writing  "collective"  policies;  these  supplement 
the  benefits  of  the  employer  under  the  law,  the  workmen's 

53 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

premiums  being  deducted  from  their  wages.  Since  the  estab- 
ishment  of  the  state  department,  however,  the  business  of  the 
Fylgia  has  fallen  off  and  is  no  longer  profitable.  In  the  old 
days,  the  company  issued  "collective"  accident  policies  in  pref- 
erence to  employers'  liability  policies.  At  the  present  time 
it  competes  fairly  for  certain  risks  with  the  state  department 
because  it  has  its  own  experience  to  guide  it;  but  the  officials 
recognize  that,  when  the  government  has  gained  experience,  it 
will  make  lower  rates  and  will  practically  have  a  monopoly.  This 
is  all  the  more  certain  since,  under  the  latest  rulings,  the  state 
department  may  also  issue  policies  under  which  compensation 
begins  with  the  day  of  accident  and  not  merely,  as  formerly,  on  the 
sixty-first  day  after  the  accident  occurred. 

The  Norden  writes  an  accident  policy,  paying  1000  crowns 
($270)  in  case  of  accidental  death,  2000  crowns  ($540)  for  total 
disability  and  one  crown  (27  cents)  a  day  for  temporary  disability 
for  a  period  not  exceeding  six  months.  But  this  company,  too, 
is  feeling  the  hopelessness  of  the  situation. 

Up  to  December,  1907,  the  total  number  of  workingmen 
insured  was  250,000.  Of  these,  70,000  are  in  the  state  depart- 
ment; the  others  are  in  private  companies.  About  100,000,  com- 
prising chiefly  those  wage-earners  under  small  employers  who  are 
not  responsible  financially,  and  an  additional  number  employed  by 
a  few  of  the  larger  concerns  which  are  financially  able  to  carry 
their  own  risks,  are  not  yet  protected.  This  is  clearly  one  of  the 
weaknesses  of  a  voluntary  system  of  insurance. 


DENMARK 

The  first  important  step  towards  workingmen's  insurance 
in  Denmark  was  taken  in  1885,  when  a  commission  was  appointed 
to  draft  a  law  providing  for  sickness  and  accident  insurance.  The 
commission  reported  in  1887  and  its  recommendations  were  em- 
bodied in  the  sickness  insurance  law  of  1892.  It  also  recommended 
the  organization  of  a  state  department  for  accident  and  employers' 
liability  insurance  with  compulsory  contributions  from  employers, 
the  expenses  to  be  met  by  a  special  tax  on  agriculture.  After 
several  years  of  discussion,  the  principle  was  entirely  discarded 

54 


DENMARK 

and  a  new  law  agreed  upon.  While  this  established  employers' 
liability  on  the  principle  of  workmen's  compensation,  it  left  the 
matter  of  insurance  entirely  at  the  employers'  option. 

The  law  was  passed  January  7,  1898,  and  went  into  effect 
one  year  later.  It  applies  to  industries  of  all  sorts,  especially  to 
those  conducted  in  factories,  those  employing  steam,  electricity, 
wind  and  water  power;  to  ships  and  over-sea  navigation,  railroads 
and  tramways,  and  the  larger  building  trades.  It  does  not  include 
agriculture.  The  law  applies  not  only  to  workingmen  proper  but 
also  to  overseers  and  the  like,  if  the  salary  does  not  exceed  2400 
crowns  ($648). 

In  cases  of  temporary  incapacity  caused  by  accident,  the 
injured  has  a  daily  allowance  of  three-fifths  of  his  wages,  minimum 
one  crown  (27  cents),  maximum  two  crowns  (54  cents),  per  diem. 
This  benefit  begins  after  a  waiting  period  of  13  weeks  and  continues 
until  a  cure  is  effected  or  the  degree  of  incapacity  has  been  deter- 
mined. This  relief  is  not  deducted  from  the  amount  payable  in 
the  final  adjustment. 

For  permanent  and  total  disability  due  to  accident,  the 
injured  workman  receives  in  one  lump  sum  six  times  his  yearly 
wages,  the  minimum  sum  being  1800  crowns  (i486)  and  maximum 
4800  crowns  ($1296).  In  case  of  partial  incapacity,  compensa- 
tion is  graded  according  to  the  degree  of  impairment  of  the  earning 
power.*  If  death  results,  the  dependents  receive  in  a  lump  sum 
the  amount  of  four  times  the  annual  wages,  minimum  1200  crowns 
($324),  maximum  3200  crowns  (1864),  and  in  addition  the  sum 
of  50  crowns  ($13.50)  for  burial  expenses.  The  employer  must 
furnish  these  benefits,  unaided  by  the  state;  but  has  the  right, 
under  the  law,  to  transfer  his  liability  to  one  of  the  mutual  or 
stock  insurance  societies  recognized  by  the  Minister  of  the  In- 
terior. Mutual  companies  have  perhaps  the  larger  share  of 
patronage  and  they  appear  to  be  increasing  in  popularity. 

Under  the  Danish  system,  administration  and  supervision 
of  the  accident  law  are  entrusted  to  a  special  workingmen's  in- 
surance council,  or  "Arbejder  Forsikrings  Raad,"  of  which  the 
Minister  of  the  Interior  is  head.  This  council  has  had  a  marked 
influence  on  the  development  of  accident  insurance.  The  Raad  is 

*  See  Table  4,  page  57. 

55 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

chiefly  a  department  for  the  adjustment  of  claims;  it  determines 
whether  the  employer  is  liable,  the  nature  and  degree  of  the  im- 
pairment of  earning  power  of  the  workman,  and  the  amount  of 
indemnity  payable.  Every  adjustment  must  be  made  through 
it,  whether  the  employer  is  insured  or  not,  and  its  decisions  are 
final.  There  is  an  appeal  from  the  decision  of  the  original  referees 
to  the  chief  of  the  department,  but  none  beyond  that,  except  to 
the  courts  on  the  construction  of  the  statute.  By  this  means, 
private  companies  are  spared  the  expense  of  adjustments,  and  have 
only  to  pay  the  claims  for  which  the  state  department  decides 
that  they  are  liable.  The  plan  has  been  satisfactory  to  workmen 
and  employers,  and  singularly,  also  to  the  insurance  companies. 

It  must  not  be  supposed,  however,  that  this  statute  relieves 
the  employer  from  common  law  liability  if  the  employe  desires  to 
have  recourse  to  the  latter.  Should  the  employe  accept  compen- 
sation under  the  statute  he  forfeits  his  common  law  right,  as  is  the 
case  in  Great  Britain;  but,  as  is  not  the  case  in  Great  Britain,  if 
he  sues  under  the  common  law,  without  the  consent  of  the  Raad, 
and  loses,  he  can  have  no  redress  under  the  statute.  With  the 
consent  of  the  Raad  employes  may  sue  under  the  old  liability 
law,  in  which  case,  if  they  lose,  they  may  yet  obtain  compensation 
under  the  new  compensation  act;  but  this  consent  is  rarely  given 
and  never  unless  there  has  been  gross  criminal  negligence. 

The  law  regarding  fishermen  and  sailors  differs  somewhat. 
Fishermen  may  insure  themselves  in  a  special  state  department, 
on  payment  of  an  annual  premium  of  five  crowns  ($1.35),  the 
state  contributing  the  remainder  of  the  cost  which,  so  far,  has 
called  for  an  additional  five  crowns.  On  the  other  hand,  com- 
pulsory insurance  with  state  aid  was  established  in  1905  for 
seamen  on  sailing  vessels.  Benefits  granted  are:  for  permanent 
and  total  disability  3600  crowns  ($972),  and  for  death  2500  crowns 
($675).  For  ships  over  20  tons,  the  employer  must  insure  in  one 
of  the  accident  companies. 

An  accident  insurance  law  covering  agriculture  and  fores- 
try was  recently  adopted.  Under  its  provisions,  the  employer 
whose  holdings  are  worth  more  than  6000  crowns  ($1620)  must 
insure  his  workmen  in  one  of  the  recognized  insurance  com- 
panies. If  the  holding  is  of  less  value,  both  the  employer  and 

56 


HOLLAND 

the  employe  may  insure  themselves  in  a  special  state  depart- 
ment, the  state  paying  all  the  cost  above  five  crowns  ($1.35)  per 
annum  as  in  the  case  of  fishermen. 

There  are  at  present  three  departments  in  the  Raad,  and 
a  fourth  for  farmers  is  being  organized.  Each  is  under  the 
direction  of  seven  representatives,  of  whom  three  are  appointed 
by  the  king,  two  by  the  employers,  and  two  by  the  employes. 
The  appointees  of  the  king  are  the  same  for  all  departments. 
The  report  of  the  Raad  for  the  year  1906,  shows  that  there 
were  in  all  2149  industrial  accidents,  subject  to  the  law,  1958  of 
the  persons  injured  having  been  insured.  In  settlement  of  valid 
claims  520,103  crowns  (1140,418)  were  disbursed. 

The  following  table  shows  the  proportion  of  the  various 
degrees  of  impairment  as  found  by  the  Raad: 

TABLE  4. — PROPORTIONS  OF  VARIOUS  DEGREES  OF  IMPAIRMENT  IN 

ACCIDENT  CASES,   1906* 
Per  Cent  of  Total  Disability  Per  Cent  of  Cases 

,5 3-6 

o-io 40.4 

'i-20 35-5 

21-25 4.9 

26-50 12.8 

51-100 2.8 

Total 100.0 

HOLLAND 

A  comprehensive  workmen's  compensation  and  accident 
insurance  law  was  passed  in  Holland,  January  2,  1901,  which  covers 
accidents  in  nearly  every  branch  of  industry. 

Previous  legislation  had  been  extremely  unfavorable  to 
employes,  who  had  recourse  only  to  the  common  law,  under 
which  it  was  necessary  to  prove  culpable  negligence  on  the  part 
of  the  employer  to  entitle  workmen  to  indemnity.  An  exception 
existed  in  the  case  of  employes  of  railroads  and  the  marine  service; 
but  in  other  cases  it  was  rarely  possible  for  workingmen  to  secure 
compensation.  There  were,  to  be  sure,  a  multitude  of  sickness 
insurance  societies  from  which  a  workingman,  if  a  member,  might 
obtain  a  small  measure  of  relief;  but  even  in  such  cases,  if  perma- 
nently injured  he  was  soon  without  an  income. 

*See  page  55. 

57 


INSURANCE    AGAINST    INDUSTRIAL    ACCIDENTS 

This  condition  of  affairs  aroused  such  public  interest  that 
a  royal  commission  was  appointed  to  formulate  a  proper  measure 
for  workingmen's  compensation  for  industrial  accidents.  It  made 
its  report  in  1894,  and  favored  obligatory  accident  insurance, 
to  be  paid  for  by  employers.  This  bill  was  withdrawn  at  the 
last  moment  by  a  change  of  cabinet.  A  remodeled  bill  was 
presented  in  1898,  but  met  with  much  opposition.  Many  opposed 
the  state  monopoly  of  this  insurance;  for,  as  in  Norway,  it  was 
to  be  taken  in  a  state  insurance  department  alone.  The  measure 
was  defeated.  A  third  attempt  was  made  in  1900  by  the  govern- 
ment, which  brought  in  a  bill  modified  so  as  to  meet  the  views  of  the 
majority.  This  became  the  law  of  1901.  It  is  confined  to  in- 
dustrial establishments;  accident  insurance  for  persons  engaged 
in  agriculture,  forestry,  the  marine  service  and  fishing  being 
reserved  for  later  legislation. 

While  this  is,  in  general,  a  compulsory  insurance  law,  it 
allows  employers  a  considerable  amount  of  freedom  in  the  method 
of  insurance.  They  may  insure  in  any  one  of  the  "recognized" 
mutual  or  stock  companies,  in  the  state  insurance  department 
(which  must  accept  all  who  apply),  or  they  may  even  be  permitted 
to  carry  their  risks  themselves.  This  last  privilege,  however,  is 
granted  only  to  those  who  can  give  sufficient  guarantee  to  the 
state  insurance  department  of  their  ability  to  meet  their  obliga- 
tions arising  under  the  law. 

In  case  of  accident,  free  medical  treatment  as  well  as  cash 
indemnity  is  granted.  For  temporary  incapacity  a  daily  allowance, 
to  the  amount  of  70  per  cent  of  the  wages  for  a  period  not  to  ex- 
ceed 43  days,  is  given ;  and  for  permanent  incapacity,  an  annuity 
amounting  to  70  per  cent  of  the  wages.  Should  the  insurance  not 
be  carried  in  the  state  department,  the  capital  value  of  the  annuity 
as  determined  by  the  state  department  must  be  deposited  at  once 
with  the  latter  by  the  employer  or  the  insurance  company.  In 
case  of  death,  burial  expenses  amounting  to  thirty  times  the  daily 
wages  are  allowed,  together  with  an  annuity  to  the  widow,  to 
children  or  grandchildren  (dependent  upon  the  workman)  up  to 
their  fifteenth  year,  and  to  parents,  grandparents  or  parents-in- 
law  (if  similarly  dependent).  The  entire  annuity  to  the  family, 
however,  must  not  exceed  60  per  cent  of  the  wages.  The  aver- 

58 


HOLLAND 

age  wage  of  the  workman  for  the  last  year  prior  to  the  accident 
is  taken,  but  not  at  less  than  one  guilder  (40  cents)  nor  more  than 
four  guilders  (|i.6o)  per  diem. 

Indemnity  is  not  granted  if  the  accident  is  due  to  the 
wilful  act  of  the  injured,  and  if  due  to  his  intoxication,  only 
half  of  the  usual  sum  is  allowed.  Disability  due  to  occupational 
disease  is  not  compensated.  Payments  are  made  weekly  by  mail. 
To  the  amount  of  260  guilders  ($104)  per  annum,  annuities  can- 
not be  sold,  pledged  or  seized  upon  execution.  An  appeal  from 
the  adjustment  of  any  claim  may  be  taken  by  the  claimant, 
employer  or  insurance  company,  either  to  an  arbitration  com- 
mittee appointed  by  both  parties,  or  to  the  Central  Court  of  Appeal. 

The  law  provided  for  a  state  insurance  department  called 
the  "Rijksveszekeringsbank, "  which  not  only  insures  all  who 
apply  but  supervises  all  private  companies.  It  passes  upon 
all  claims  against  itself,  other  companies  or  employes,  and 
pays  indemnities  and  annuities,  collecting  these  in  turn  from 
other  companies  or  employers.  It  receives  reports  upon  all 
accidents,  and  must  make  an  annual  report  of  all  cases.  It 
has  70  agents,  its  own  staff  of  physicians,  and  does  business 
throughout  the  kingdom  by  using  the  post  offices  as  branches, 
receiving  and  making  payments  through  the  latter. 

The  state  insurance  department  enjoys  certain  advantages 
over  private  companies.  Half  the  salaries  of  its  officers  are 
paid  by  the  state,  and  it  may,  and  does,  levy  assessments  on 
insurance  companies  for  a  portion  of  its  running  expenses.  It 
has  a  larger  business  than  any  private  company.  It  must,  how- 
ever, accept  all  who  apply,  and  this,  together  with  the  fact  that 
it  is  not  allowed  to  charge  more  than  a  fixed  rate  which  is  a  mean 
for  all  industries,  results  in  adverse  selection  against  it.  In  Hol- 
land, as  elsewhere,  it  has  been  found  that  risk  of  injury  and 
duration  of  disability  are  both  much  greater  at  older  than  at 
younger  ages.  This  susceptibility  should,  of  course,  require  a 
higher  rate  of  premium  for  older  workmen;  but  the  department 
is  not  permitted  to  make  such  a  discrimination  nor  indeed  any 
other.  In  consequence,  better  risks  go  to  private  companies  at 
correspondingly  lower  rates.  The  state  department  is,  therefore, 
facing  a  considerable  deficit. 

59 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

Private  companies  are  held  to  a  standard  of  strict  sol- 
vency, the  state  department  being  empowered  to  determine  the 
capitalized  value  of  benefits  payable  by  them  and  to  require 
the  companies  to  make  suitable  deposits  to  secure  them.  De- 
posits are:  (i)  25  per  cent  of  one  year's  premium,  plus  three 
times  their  mean  variation,  the  policies  being  valued  every  five 
years;  and  (2)  the  capital  value  of  annuities.  An  attempt 
has  been  made  by  using  Dutch  statistics,  which  are  yet  scanty 
and  imperfect,  and  those  of  other  countries,  especially  of  Ger- 
many, to  place  premiums  upon  a  scientific  basis;  but  it  is  con- 
ceded that  this  has  not  as  yet  been  accomplished. 

But  few  employers  carry  their  own  risks,  and  they  are 
usually  the  smaller  and  less  important.  All  are  compelled 
to  report  cases  of  accident  to  the  state  insurance  department 
within  twenty-four  hours  and  to  deposit  with  the  department 
the  capital  value  of  the  annuity  as  determined  by  it.  As  the  law 
went  into  effect  February  i,  1903,  it  is  still  too  soon  to  give  final 

TABLE    5. — TOTAL   NUMBER   OF   ACCIDENTS,    COST  OF    MANAGEMENT 
AND   AMOUNT  OF    INDEMNITIES   PAID,    1903-1905 


1903 

1904 

1905 

Number 

Number 

Number 

Total  accidents    

•     38,194 

49-542 

55.523 

Number    in    Amsterdam,     Rotterdam 

and  Hague       

•     '3.°47 

17,040 

18,343 

Number  indemnified  .... 

•     35.956 

47,984 

52,4>9 

EXPENDITURES: 

Guilders 

Guilders 

Guilders 

Cost  of  management 

.  427,804 

663,863 

973.554 

Indemnities: 

Medical  services    . 

•  277,396 

494.099 

556,247 

Temporary  disability  . 

.  485,301 

702,392 

799,o82 

Permanent  disability  . 

.    113,700 

396,632 

587,344 

Cost  of  burial 

13,066 

1  2,420 

'3.747 

Annuities  to  dependents     . 

.       21,222 

72,404 

125,760 

Other  expenditures 

1,726 

.      3>7«9 

Total  indemnities 

910,685 

1.679,673 

2,085,899 

Total  expenditures 

1,338,489 

2.343,536 

3.059.453 

INDEMNITIES  PAID  BY: 

State  insurance  department 

•  3«  ',774 

529,671 

662,761 

Mutual  and  stock  companies 

•   55°.2I7 

1,061,316 

1,329,746 

Individual  employers 

.     58-694 

88,686 

93,392 

Total      

.  910,685 

1,679,673 

2,085,899 

60 

.  /  ^'  /  j 

BELGIUM 

judgment  in  regard  to  it.  Radical  changes,  however,  will  be  neces- 
sary in  the  near  future.  The  figures  in  Table  5  are  taken  from 
the  reports  of  the  state  insurance  bank  for  the  years  1903  to  1905. 

Insured  establishments  on  December  31,  1903,  numbered 
72,933;  December  31,  1905,  74,779;  and  in  1906,  82,129.  At 
the  end  of  1903,  there  were  562,808  insured  employes,  the  amount 
of  insurance  being  221,787,487  guilders  ($88,714,995). 

The  above  statistics  would  seem  to  indicate  that  the  new 
law  had  not  resulted  in  a  reduction  of  the  number  of  accidents, 
but  the  apparent  increase  is  due,  in  large  part,  to  the  fact  that 
they  are  now  more  carefully  reported.  The  state  insurance  depart- 
ment does  nothing  in  the  direction  of  prevention,  which  is  looked 
after  by  the  factory  inspection  department;  neither  does  the  opera- 
tion of  the  law  seem  to  have  had  much  effect  in  inducing  em- 
ployers to  take  greater  precautions  against  accidents  or  to  install 
safety  devices. 

BELGIUM 

In  Belgium,  a  modern  employers'  liability  law  has  re- 
cently been  enacted.  Before  1905,  with  the  single  exception 
of  miners  who  were  protected  by  the  compulsory  insurance  law 
of  1868,  employes  could  obtain  compensation  for  industrial 
accidents  only  when  they  could  prove  that  the  accident  was  due 
to  the  negligence  of  the  employer. 

The  new  law  was  enacted  December  24,  1903,  after  spirited 
parliamentary  debate.  Repeated  demands  were  made  for  com- 
pulsory insurance  of  all  workingmen.  Some  advocated  the  estab- 
lishment of  mutual  insurance  funds  to  which  both  employers  and 
employes  should  contribute;  but  none  of  these  ideas  were  ac- 
ceptable, and  only  a  workmen's  compensation  act  was  passed. 
It  went  into  effect  July  i,  1905,  and  applies  to  workmen  in  all 
industries,  including  manufactures,  trade  and  agriculture,  also 
to  apprentices  and  foremen  exposed  to  industrial  dangers  whose 
yearly  earnings  do  not  exceed  2400  francs  (1480).  Servants, 
however,  as  well  as  self-employed  persons,  are  not  subject  to 
the  law. 

The  indemnity  provided  for  is  as  follows:  In  case  of  tem- 
porary incapacity  of  longer  duration  than  one  week,  compensa- 

61 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

tion  of  not  more  than  half  the  average  daily  earnings  beginning 
one  day  after  the  accident:  in  case  of  permanent  incapacity,  a 
yearly  compensation  varying  with  the  degree  of  impairment  and 
the  average  earnings,  the  maximum  being  one-half  the  average 
earnings. 

Three  years  after  an  agreement  upon  the  allowance,  a  re- 
vision may  be  had,  but  after  the  expiration  of  that  time  the 
yearly  indemnity  becomes  a  life  annuity.  In  addition  to  this 
compensation,  the  employer  must,  during  the  first  six  months 
of  disability,  bear  the  cost  of  treatment  and  medicines.  Where 
the  accident  results  fatally,  he  must  pay  75  francs  ($15)  to  cover 
funeral  expenses  and,  in  addition,  compensate  dependent  rela- 
tives by  an  annuity  varying  with  the  age  of  the  injured  and  his 
wages,  the  maximum  sum  being  30  per  cent  of  his  yearly  earnings. 
Disputes  are  settled  by  justices  of  the  peace  or  by  a  commission 
having  summary  judicial  powers. 

Having  established  liability,  the  law  permits  a  great  deal 
of  freedom.  Instead  of  requiring  compulsory  insurance,  either 
state  or  mutual,  the  law  holds  employers  individually  liable. 
The  latter  may  insure  or  not,  as  they  will,  but  they  escape 
liability  only  if  they  insure  in  a  Belgian  company  approved  by 
the  state.  Such  must  hold  a  sufficient  reserve  to  protect  all 
contracts,  including  the  capitalized  value  of  all  claims  and  an 
adequate  premium  reserve.  There  are  but  few  Belgian  com- 
panies and  of  these  only  two  or  three  are  large  enough  to 
command  confidence.  These  have  persistently  refused  to  insure 
the  more  hazardous  risks,  confining  their  business,  at  excellent 
rates,  to  the  very  safest  classes.  In  consequence,  they  have  a 
very  low  loss  rate  and  have  made  large  profits,  indicating  that 
for  the  classes  of  risks  carried,  insurance  could  be  furnished  at 
materially  lower  rates. 

The  large  foreign  companies,  especially  those  of  England 
and  France,  are  more  liberal  in  acceptance  of  risks.  They  try 
to  do  a  safe  business  but  their  margins  of  profit  have  been  much 
lower.  Employers  would  probably  not  pay  them  such  large 
rates  as  they  do  the  Belgian  companies,  since  insurance  in 
them  does  not  relieve  from  liability,  but  merely  provides  for 
indemnity.  If  the  company  were  to  fail,  the  employer  would 

62 


BELGIUM 

still  be  liable.  As  a  result  of  low  rates,  these  companies  have 
lost  money  and  have  been  compelled  recently  to  raise  their 
premiums. 

A  fund  to  insure  those  entitled  to  compensation  against 
the  bankruptcy  of  employers  has  been  established  by  the  state 
department  under  the  name  of  the  "Guarantee  Fund."  It  is  sup- 
ported by  contributions  levied  upon  employers,  and  has  as  its  aim 
the  payment  of  accident  indemnities  when  the  employer  is  not 
able  to  meet  his  obligations.  The  state  department  of  insurance 
also  has  authority,  in  addition  to  its  other  insurance  activities, 
already  noted,  to  insure  employers  against  liability.  Up  to  the 
present,  however,  it  has  not  done  so.  It  seems  inconsistent  and 
undesirable,  as  has  already  been  said,  that  an  institution  which 
is  appealing  to  the  working  people  as  a  savings  bank,  annuity 
company  and  life  insurance  company  should  appear  before  them 
in  the  role  of  an  adjuster  of  accident  claims  as  well,  seeking  to 
pare  down  demands  which  they  deem  just.  The  part  played  by 
the  government  so  far,  therefore,  is  indirect. 

Companies  have,  however,  found  it  to  their  advantage  to 
relieve  themselves  from  liability  by  purchasing  from  the  state 
department  an  annuity  upon  the  life  of  the  victim.  As  the 
amount  of  annuity  thus  obtained  is  considerably  larger  than  that 
given  by  private  companies  when  the  life  is  deemed  absolutely 
first  class,  this  procedure  is  becoming  common,  except  when  the 
expectation  of  life  is  greatly  impaired  by  the  accident. 

One  of  the  private  accident  insurance  companies  men- 
tioned above  is  the  "Compagnie  Beige  d'Assurance  Generate  sur 
la  Vie/'  which  also  writes  annuities  in  cases  of  accident.  Agents 
are  paid  10  per  cent  commission  and  \2\  per  cent  for  10  years' 
contracts.  Government  mortality  tables  are  used,  and  during 
1907  the  premium  receipts  amounted  to  about  300,000  francs 
($60,000) . 

Miners  have  been  subject  to  compulsory  insurance  since 
1868.  They  number  130,000,  and  insurance  is  effected  through 
sickness  insurance  associations  to  which  employers  and  employes 
both  contribute  and  to  which  the  state  and  the  province  give 
subsidies.  Benefits  vary  according  to  the  by-laws,  disputes  as  to 
awards  being  settled  by  a  government  commission. 

63 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 
FRANCE 

Employers'  liability  and  workmen's  compensation  for  in- 
dustrial accidents  are  covered  in  France  by  the  law  of  April  9, 
1898,  and  by  a  series  of  amendments  passed  since  that  date. 
The  law  which  holds  the  employer  liable  and  provides  for  vol- 
untary insurance  was  a  compromise  between  the  demands  of  the 
Chamber  of  Deputies  for  compulsory  insurance  and  the  opposition 
of  the  conservative  Senate.  The  result  is  a  mean  between  the 
English  and  the  Italian  laws.  Like  the  English  law,  it  establishes 
strict  liability  of  the  individual  employer,  but  it  excels  in  requiring 
greater  security  for  the  payment  of  every  possible  claim.  Unlike 
the  Italian,  however,  it  does  not  require  the  employer  to  insure. 

Before  this  law  went  into  effect,  compensation  for  indus- 
trial accidents,  with  few  exceptions,  was  awarded  according 
to  the  civil  code.  Under  this,  workmen  could  receive  com- 
pensation only  when  they  proved  negligence  on  the  part  of  the 
employer  or  of  his  "vice-principal."  To  improve  this  situation, 
there  had  been  established  in  1868  a  government  accident  insur- 
ance department  known  as  the  "Caisse  Nationale  d' Assurance  en 
Gas  d' Accidents."  This  institution,  still  in  operation,  insured 
employers  who  applied  voluntarily,  against  their  liability  for 
accidents  to  their  workmen  which  might  result  in  death  or  perma- 
nent invalidity  only;  temporary  injuries  were  entirely  ignored. 
Premiums  in  this  fund  were  three,  five  or  eight  francs  annually  per 
employe.  In  cases  of  permanent  incapacity,  320  times  the  pre- 
mium was  paid  as  compensation.  This  sum  could  then  be  trans- 
ferred to  the  old  age  pension  fund,  and,  by  means  of  a  government 
subvention,  an  annuity,  minimum  150  francs  ($30),  was  given 
for  life.  But  as  the  Caisse  would  not  cover  injuries  resulting  in 
temporary  disability,  employers  were  constantly  worried  by  small 
claims  and  so  refused  to  insure  with  the  government.  As  a  result, 
in  spite  of  its  many  advantages,  the  fund,  after  nearly  30  years' 
continuous  existence,  showed  a  total  of  only  39,654  insured  at  the 
close  of  1 896. 

The  law  of  1898  applies  to  workmen  in  all  industrial  estab- 
lishments, regardless  of  the  number  employed,  and  provides 
compensation  for  all  injuries  lasting  more  than  four  days,  upon 

64 


FRANCE 

the  following  scale:  If  the  accident  results  in  permanent  and 
total  disablement,  compensation,  paid  quarterly,  is  at  the  rate 
of  two-thirds  the  wages;  if  in  permanent  partial  disablement, 
at  the  rate  of  one-half  the  diminution  in  earnings;  if  in  temporary 
disablement  of  more  than  four  days,  a  daily  allowance  of  one- 
half  the  wages,  such  allowance  beginning  with  the  fifth  day. 

.  Should  the  accident  result  in  death,  compensation  takes 
three  forms:  (i)  The  surviving  wife  or  husband  receives  an 
annuity  of  one-fifth  the  yearly  wages  of  the  deceased,  payable 
during  life  or  until  remarriage,  when  a  lump  sum  equal  to  three 
times  the  annuity  is  paid.  (2)  The  children  of  the  deceased,  includ- 
ing illegitimate  children  recognized  before  the  accident,  up  to  the 
age  of  sixteen  receive  an  allowance,  payable  quarterly,  equal  to 
15  per  cent  of  the  yearly  earnings  if  only  one  child  is  left,  25  per 
cent  if  two,  35  per  cent  if  three,  40  per  cent  if  more  than  three; 
but,  if  children  are  left  without  either  father  or  mother  alive,  then 
each  gets  one-fifth  of  the  yearly  earnings  of  the  deceased,  the 
total  to  widow  and  children,  however,  not  to  exceed  60  per  cent 
of  the  earnings.  (3)  If  no  wife,  husband  or  child  survive,  but 
there  are  other  relatives  dependent  on  the  deceased,  each  per- 
son receives  an  allowance  as  specified  in  the  law,  the  aggregate 
amount  of  such  allowances  not  to  exceed  30  per  cent  of  the 
yearly  earnings  of  the  deceased.  In  addition,  the  employer  is 
required  to  defray  cost  of  medical  attendance  and  medicines  and 
funeral  expenses  up  to  100  francs  ($20).  Indemnity,  however, 
is  subject  to  the  restriction  that,  if  the  yearly  wages  of  the  in- 
jured workman  exceed  2400  francs  ($480),  he  is  entitled  under 
the  law  to  full  compensation  in  respect  to  his  earnings  up  to 
this  sum  only;  all  earnings  over  2400  francs  (1480)  count  as  one- 
quarter  for  the  purpose  of  reckoning  his  claim  for  compensation. 

An  employer  may  escape  liability  for  the  temporary  allow- 
ances provided  for  by  law  and  for  cost  of  medical  attendance  and 
medicines  during  a  period  not  exceeding  90  days  from  the  date 
of  the  accident,  if  he  has  caused  his  workman  to  join  a  society 
which  provides  free  medical  attendance  and  medicines  and  a 
daily  allowance  in  case  of  accidents;  but,  in  such  cases,  the 
employer  must  pay  not  less  than  one-third  the  total  contribu- 
tion required  from  members  of  the  society.  If  the  daily  allow- 

5f  65 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

ance  paid  by  such  society  is  less  than  one-half  the  daily  wage 
of  the  workman,  the  employer  must  make  up  the  difference. 

An  employer  may  also  claim  exemption,  if  he  contributes 
an  annual  sum  to  a  benefit  fund  for  his  workmen,  established 
under  the  law  of  June  29,  1894,  relating  to  provident  and  pension 
funds  for  mines  and  quarries,  or  upon  lines  similar  to  those  laid 
down  by  that  law.  In  either  case,  the  amount  and  the  condi- 
tion of  payment  of  the  contribution  must  be  agreed  upon  with 
the  members  of  the  fund  and  approved  by  the  government.  An 
injured  person  entitled  under  this  law  to  receive  a  life  annuity 
may,  with  the  consent  of  the  court,  receive  a  lump  sum  not  ex- 
ceeding one-fourth  of  the  present  value,  to  use  in  providing  an 
annuity  payable  during  the  joint  lives  of  himself  and  his  surviving 
wife;  or  in  like  manner  if  a  woman  is  injured;  but  the  total  sum 
for  which  the  employer  is  liable  shall  not  be  increased  by  any 
such  arrangement. 

Notice  of  every  accident  by  which  a  workman  is  disabled 
must  be  given  by  the  employer  or  his  representative  within  48 
hours  of  its  occurrence  to  the  mayor  of  the  arondissement,  who 
must  then  notify  the  factory  or  mines  inspector.  If  the  doctor's 
certificate,  which  must  be  sent  with  the  notice  of  accident,  shows 
that  the  injury  is  likely  to  result  in  death,  or  permanent  total 
or  permanent  partial  disablement,  the  mayor  must  inform  the 
magistrate,  who  makes  an  inquiry  to  determine  who  is  entitled 
to  compensation  and  the  daily  and  annual  earnings  on  which  it  is 
to  be  based.  Legal  proceedings  for  recovery  of  compensation 
must  be  instituted  within  one  year.  If  the  workman  caused  the 
accident  by  his  own  culpable  negligence,  the  court  may  at  its  dis- 
cretion reduce  the  award  as  a  penalty  or  increase  it  if  the  accident 
is  due  to  the  culpable  negligence  of  the  employer  or  his  repre- 
sentative. 

Under  this  law  claimants  against  an  employer  are  preferred 
creditors;  the  courts  may  also  enforce  the  claims  without  costs. 
Claims  for  injuries  resulting  in  permanent  injury  or  death,  if 
not  duly  met  by  the  employer  or  by  the  insurance  company, 
society  or  fund,  are  paid  by  the  national  old  age  pension  fund. 
To  enable  this  guarantee  fund  to  meet  such  claims,  the  industrial 
license  tax  upon  all  industries  was  increased  and  a  special  tax  levied 

66 


FRANCE 

on  mines.  The  fund  also  recovers  all  sums  paid  for  any  such 
claim  from  the  employer,  company,  society  or  fund,  if  solvent, 
with  which  such  employer  may  have  effected  an  insurance 
against  his  liability;  it  is  loser  only  in  event  of  insolvency  of 
those  who  are  primarily  liable,  and  virtually  it  guarantees  their 
ability  to  meet  these  claims. 

All  companies,  societies  or  funds  undertaking  insurance 
against  the  employer's  liability,  are  supervised  by  the  govern- 
ment and  are  bound  to  hold  adequate  reserve  funds  and  to  give 
security  required  by  the  government.  Any  agreement  to  waive 
this  law,  as,  for  instance,  to  "contract  out,"  is  absolutely  void. 
This  is  especially  important  since  compensation  is  payable  period- 
ically often  for  long  terms  and  sometimes  for  life. 

Amendments  to  the  law  of  1898,  providing  for  its  admin- 
istration and  extending  its  scope,  were  soon  forthcoming.  Those 
of  March  22,  1902,  and  March  31,  1905,  determine  more  clearly 
the  mode  of  procedure  in  cases  of  accident,  fix  time  and  place 
of  payment  of  compensation,  and  make  many  improvements  in 
administration,  the  most  important  of  which  is  that  in  regard 
to  medicines,  medical  attendance  and  their  cost.  The  injured 
may  under  this  law  choose  his  physician,  the  bill  to  be  paid  by 
the  employer,  who  must  also  pay  cost  of  hospital  service  when- 
ever necessary.  The  maximum  cost  of  these  items  to  the  em- 
ployer is  fixed  at  four  francs  (80  cents)  per  day  in  Paris,  and 
three  and  one-half  francs  (70  cents)  elsewhere.  This  is  in  addition 
to  the  cash  compensation. 

To  extend  the  scope  of  the  law,  two  measures  have  been 
passed.  The  first,  of  June  30,  1899,  extended  it  to  cover  acci- 
dents caused  by  the  use  of  agricultural  machines  driven  by  me- 
chanical power,  the  victims  being  persons  engaged  directly  with 
the  use  of  such  machines,  or  with  the  motive  power  by  which 
they  are  driven.  More  important  was  the  second  amendment,  of 
April  12,  1906,  which  extended  liability  to  employers  of  mercantile 
classes.  Obviously  some  of  their  employes — drivers,  for  instance 
— are  often  subject  to  greater  dangers  than  many  engaged  in 
industries. 

Aside  from  the  provision  made  by  the  amendment  of  1899, 
agricultural  workers  are  still  excluded  from  the  benefits  of  the 

67 


INSURANCE   AGAINST    INDUSTRIAL   ACCIDENTS 

workmen's  compensation  act  of  France;  nor  are  servants  and 
incidental,  so-called  "day"  laborers  protected.  In  cases  of 
accident  to  these  the  civil  code  still  applies;  but  to  avoid  liti- 
gation, an  amendment  was  passed  in  July,  1907,  empowering 
employers  voluntarily  to  accept  the  provisions  of  the  workmen's 
compensation  act  for  them  also.  This  measure  clearly  presages 
further  extension. 

The  French  law  clearly  puts  more  emphasis  on  compensation 
than  on  insurance.  Employers,  except  miners  and  ship-owners,  are 
not  compelled  to  insure,  though  encouraged  by  the  law  to  do  so,  and 
only  the  very  imprudent  or  the  very  rich  carry  their  own  risks. 
To  cover  the  insurance  there  were  operating  in  1907,  18  mutual 
societies,  18  French  companies,  6  foreign  companies,  and  12  estab- 
lishment and  industry  funds. 

It  is  estimated  that  at  present  over  70  per  cent  of  all  work- 
ingmen  entitled  to  compensation  under  the  act  are  covered  by 
insurance  which  as  early  as  1901  represented  an  aggregate  payroll 
of  2,828,500,000  francs  ($565,700,000).  In  1906,  even  before  the 
extension  to  mercantile  establishments,  the  payroll  of  insured 
rose  to  3,615,000,000  francs  ($723,000,000).  This  increase  is  much 
larger  proportionately  than  either  the  increase  in  wages  or  in 
population,  and  indicates  clearly  an  extension  of  the  operations  of 
the  companies. 

Insurance  was  distributed  as  follows: 

TABLE   6. — PERCENTAGE    DISTRIBUTION    OF    ACCIDENT    INSURANCE 
BY  KIND  OF  COMPANY,   190!    AND    1906 

1901  1906 

Per  cent  Per  cent 

In  stock  companies 78.7  71.0 

In  mutual  companies         .       .       .       .         21.0  22.3 

In  associations  of  employers     .       .       .          0.3  6.7 

IOO.O  IOO.O 

The  total  amount  paid  to  workmen  and  dependents  by 
insurance  companies  and  societies  was,  in  1905,  2,500,000  francs 
($500,000),  in  1906,  3,204,000  francs  ($640,000),  and  in  1907, 
3,250,000  francs  ($650,000).  The  stock  companies  paid  59  per 
cent  of  the  entire  sum.  This  remarkable  increase  in  the  amount 

68 


FRANCE 

of  insurance  and  of  indemnities  has  not  been  a  great  drain  on 
industry,  as  the  following  ratios  of  premium  receipts  to  payrolls 
show. 

TABLE   7. — RATIO  OF   PREMIUM   RECEIPTS  TO   PAYROLLS,    IN    INSUR- 
ANCE   COMPANIES    AND    SOCIETIES,    1901-1906 
Year  Per  cent 


IQO2  ............. 

§§ 

lOoa 

:  I 

IQO4 

AQ 

IQOI; 

72 

IQOO  . 

i< 

Rates,  it  will  be  observed,  have  somewhat  increased;  but 
they  are  clearly  still  comparatively  low.  The  business  has  not  so 
far  been  profitable.  All  the  companies  and  societies  are  subject 
to  supervision  by  the  government,  and,  with  the  exception  of 
the  associations  of  employers,  must  make  deposits  with  the  state. 
The  supervision  has  been  careful  and  only  one  company  has  proved 
insolvent  in  many  years.  Rates  are  practically  uniform,  and  the 
companies  all  do  about  the  same  sort  of  business,  seeking  good 
risks  and  declining  or  penalizing  poor  ones.  They  work  through 
agents  at  10  per  cent  commission,  the  expenses  of  one  of  the 
largest  French  companies,  "L'Abeille,"  having  ranged  from  18  per 
cent  to  20  per  cent  of  premium  receipts;  others  average  about  22 
per  cent. 

Establishment  and  industry  funds,  though  possessing  yet 
but  a  small  proportion  of  the  total  business,  are  developing  rap- 
idly, having  been  given  a  strong  impetus  by  the  law  of  1906. 
They  are  composed  of  employers  of  the  same  or  allied  industries, 
and  therefore  can  carry  on  their  business  without  commissions 
to  agents  or  large  management  expenses.  They  have,  moreover, 
excellent,  technical  information  concerning  the  causes  of  acci- 
dents, and  by  enforcing  strict  rules,  are  able  to  reduce  their 
losses  very  materially. 

About  30  per  cent  of  the  employes  entitled  to  the  benefits 
under  the  act  though  not  insured  by  their  employers,  are  not 
left  unprotected.  The  National  Guarantee  Fund  pays  their  in- 
demnities if  the  employer  fails  to  do  so.  The  following  figures 
show  the  growth  of  this  fund: 

69 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 


TABLE  8. — INCOME  AND  EXPENDITURES  OF  THE  NATIONAL  GUARAN- 
TEE   FUND,    1905-1906 

Income  Expenditures 

Year  (Francs)  (Francs) 

1905 1,556,428        901.829 

1906 1, 859.053        743.988 

The  official  reports  give  the  number  of  accidents,  their 
distribution  in  the  various  industries,  and  the  nature  of  the 
resulting  injuries  as  follows: 

TABLE   9. — NUMBER  OF  ACCIDENTS   IN  24   CLASSES   OF    INDUSTRIES 
AND   OCCUPATIONS,    1903-1906 


Industries  and  occupations 

1903 

1904 

1905 

1906 

i.  Fisheries  (industrial)     . 

86 

92 

118 

114 

2.  Forestry  (industrial) 

3.359 

2,932 

2,880 

2,7"  4 

3.  Subsidiary  mining  trades 

220 

346 

303 

385 

4.  Food  stuff  industries     . 

13.159 

'3.374 

15,276 

17.091 

5.  Chemical  industries 

9.575 

10,466 

13.039 

15.643 

6.  Paper  industries     .... 

3.330 

3,608 

4.49i 

5.633 

7.  Book-printing,  etc. 

1,859 

2,054 

2.455 

2.737 

8.  Textile  industries,  proper     . 

I4,6l8 

14,481 

16,537 

20,419 

9.  Cloth  and  clothing  industries 

1,678 

1,721 

2,197 

2,633 

10.  Straw,  feather,  horsehair  industries 

218 

170 

177 

250 

1  1.  Skin  and  leather  industries  . 

3,072 

3,102 

3.697 

4,295 

12.  Wood  industry       .... 

15.470 

15.540 

17,962 

20,034 

13.  Metal  industry,  metallurgy  . 

15.750 

17,466 

22,001 

26,676 

14.  Rough  metal  works 

42,955 

45,688 

54.796 

67,012 

15.  Precious  metal  works    . 

321 

310 

367 

429 

1  6.  Precious  stones      .... 

57 

34 

3° 

4> 

17.  Stone  cutting  and  grinding  industries 
1  8.  Stone  and  earth  construction 

969 
29,889 

1,001 
29,030 

1,084 
33.750 

1,216 

38,786 

19.  Pottery    

8,360 

8,564 

9,939 

12,445 

20.  Warehouse  and  traffic    . 

32,2.5 

34.330 

38,492 

44,959 

21.  Trade       

12,935 

15,284 

17.218 

19.835 

22.  Liberal  professions 

86 

84 

,38 

123 

23.  Personal  servants  .... 

152 

141 

151 

223 

24.  Governmental  and  dept.  servants 

2,420 

5,306 

2,784    1 

3,167 

Total   

212,753 

222,  1  24 

259,882 

306,860 

Of  the  306,860  reported  accidents  for  the  year  1906,  there 
were  1,499  fatal  accidents;  4,655  resulting  in  permanent  inca- 
pacity; 296,339  resulting  in  temporary  incapacity;  and  4,367  of 
which  the  consequences  were  unknown. 

In  the  mines  and  quarries,  and  mines  alone,  the  following 
conditions  prevailed: 

70 


FRANCE 


TABLE     IO. — FATALITIES    AND    INJURIES    IN    MINES    ANI 

1901-1906 


Year 

MINES  AND  QUARRIES 

MINES  ^ 

Fatalities 

Injuries 

Fatalities 

-•#,/'  4 
22,613 
23,404 
23,842 
25,428 
29,270 

1901 
I9O2      . 
1903      . 
1904      . 
1905      . 
1900      . 

36. 

353 
359 

3^ 
360 

'.452 

32,765 
29.332 
30.377 
30,614 

33.  '36 
37,890 

198 
180 
170 
184 
182 
1,280 

Of  every  1000  workmen  in  the  coal  mines,  there  were 
in  1904,  139.77  injured  or  killed;  in  1905,  146.28;  and  in  1906, 
171.22. 

A  remarkable  increase  in  the  number  of  accidents  is  seen 
here,  especially  of  cases  of  temporary  incapacity  and  of  perma- 
nent partial  incapacity.  The  increase  cannot  be  ascribed  in 
any  large  degree  to  simulation,  for  the  injured  are  not  members 
of  mutual  sickness  insurance  societies  from  which  they  would 
receive  additional  benefits  under  the  law.  It  is  not  to  the  interest 
of  the  workman  to  simulate,  and  those  directly  in  charge  explain 
this  increase  on  other  grounds.  According  to  them,  it  is  due 
to  the  greater  effectiveness  of  the  law  which  now  requires  em- 
ployers to  report  all  accidents.  Some  simulation,  however,  must 
exist,  in  the  form  of  unnecessary  extension  of  the  period  of  in- 
validity. Another  cause  of  complaint  on  the  part  of  employers  re- 
lates to  the  enormous  increase  in  the  aggregate  cost  of  medical 
assistance  and  medicines.  Under  the  law,  the  injured  has  the 
choice  of  physicians,  the  fees  fixed  by  law  to  be  paid  by  his  em- 
ployer. In  1901,  the  cost  aggregated  5,500,000  francs  ($1,100,- 
ooo).  In  1906,  this  sum  had  risen  to  10,500,000  francs  ($2, 100,000), 
an  increase  of  94  per  cent,  although  the  payrolls  increased  only 
28  per  cent.  This  growth  in  the  cost  of  medical  assistance  and 
medicines  is  especially  great  in  the  towns,  occasioned  by  un- 
necessary multiplication  of  the  number  of  professional  visits  or 
treatments.  It  has  therefore  been  suggested  as  a  remedy  for  this 
apparent  abuse,  that  the  free  choice  of  physicians  be  discontinued. 

At  present,  all  these  difficulties  in  the  operation  of  the  acci- 
dent law  are  the  subject  of  proposed  regulation  and  constitute  a 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

center  of  legislative  interest  in  France,  the  most  important  matter 
under  discussion  being  the  extension  of  the  law  to  agricultural 
laborers.  A  commission  appointed  in  1904  reported  a  bill  granting 
them  compensation,  which  was  accepted  by  the  government  and 
reported  in  the  Chamber  in  November,  1906.  The  opposition  was 
so  strong,  however,  that  it  was  deemed  advisable  to  withdraw  the 
bill.  A  similar  measure  has  again  been  presented,  together  with 
provisions  proposing  to  extend  the  law  of  1898  to  certain  classes 
of  government  employes.  This  is  now  under  consideration. 

The  government  has,  since  1898,  singled  out  seamen  for 
special  legislative  protection  against  accidents  and  sickness  inci- 
dental to  their  work.  Even  before  that  date,  they  received 
compensation  under  a  special  trade  statute  more  liberal  than  the 
civil  code,  which  gave  the  injured  free  medical  attention,  full 
wages  for  a  period  up  to  four  months,  and  cost  of  transportation 
home.  The  uncertainties  of  litigation  were  very  unsatisfactory, 
however,  and  as  a  result,  the  law  of  1898  was  passed  which  estab- 
lished the  "Caisse  de  Prevoyance  des  Marins  Francais  contre  les 
Risques  et  Accidents  de  leur  Profession,"  a  state  fund  for  insuring 
sailors.  This  fund  is  sustained  by  contributions  of  employers  and 
employes,  gifts  and  legacies,  grants  of  various  sorts  and  advances 
by  the  state,  free  of  interest.  Contributions  of  seamen  are  com- 
pulsory and  consist  of  small  deductions  from  their  wages,  ship- 
owners paying  an  amount  equal  to  the  aggregate  contributed 
by  their  respective  crews.  Benefits  are  given  for  temporary 
incapacity  and  for  permanent  total  disability.  In  addition, 
provision  is  made  for  the  widow  during  widowhood  as  well  as 
for  orphans  during  their  minority. 

This  law  satisfied  nobody,  and  a  commission  was  appointed 
to  study  the  question  anew.  As  a  result,  a  bill  was  presented  to 
the  Chamber  July  5,  1905,  which  was  accepted  without  debate 
and  became  a  law  in  December,  1905.  According  to  its  pro- 
visions sailors,  as  well  as  other  seafaring  persons  (including 
physicians,  stewards,  cooks,  etc.),  from  the  age  of  ten  are  com- 
pulsorily  insured  with  the  fund.  As  before,  the  fund  receives  con- 
tributions from  employers  and  employed,  and,  in  addition  to  other 
subventions  from  various  private  and  governmental  sources,  re- 
ceives 4  per  cent  of  the  subsidies  to  the  merchant  marine  and 

72 


SWITZERLAND 

one-half  of  one  per  cent  of  the  letting  price  of  contracts  for 
building  war  vessels.  Contributions  of  employes  vary  from 
i  per  cent  of  their  salary,  in  the  case  of  officers,  to  a  few  cen- 
times monthly  for  the  younger  sailors.  Vessel  owners  must 
pay  3^  per  cent  upon  their  respective  payrolls. 

Under  this  law  compensation  granted  to  sailors  in  case  of 
accident  is  much  higher  than  that  accorded  by  the  statute  of 
1898.  Injuries  resulting  in  permanent  incapacity  call  for  a  life 
annuity  of  half  the  usual  wages,  not  less  than  200  francs  ($40) 
nor  more  than  300  francs  ($60)  per  annum,  and  those  causing 
permanent  partial  incapacity,  for  a  sum  not  to  exceed  thirteen- 
twentieths  of  the  amount  which  would  be  paid  for  permanent  total 
disability.  Temporary  incapacity  is  remunerated  for  each  day 
up  to  four  months  and  if  the  case  warrants,  for  succeeding 
periods  of  six  months  until  complete  recovery  or  the  establish- 
ment of  permanent  disability.  The  widow  continues  to  receive 
compensation  though  she  remarries.  The  law  grants  no  compen- 
sation to  the  children  so  long  as  the  widow  survives,  but  makes 
additions  to  her  annuity  of  50  francs  (|io)  per  annum  for  each 
child  under  sixteen.  Should  the  widow  die,  her  pension  goes  to 
the  orphans  until  they  reach  the  age  of  sixteen.  Dependent  pa- 
rents over  sixty  years  of  age  receive  an  annuity  equal  to  half 
that  to  which  the  widow  is  entitled. 

This  measure  deals  most  liberally  with  the  249,000  seamen 
under  its  protection.  As  might  be  expected,  the  cost  has  much 
more  than  doubled.  Under  the  old  law,  540,528  francs  ($108,106) 
were  expended  yearly,  while  under  the  new,  the  sum  rose  in  1906 
to  1,634,375  francs  ($326,875)  not  including  the  cost  of  per  diem 
benefits  during  temporary  disability.  It  is  therefore  expected 
that  this  measure,  attractive  as  it  is  in  many  features,  will  lead 
to  a  very  large  deficiency. 


SWITZERLAND 

Despite  the  advanced  character  of  its  legislation  along  many 
important  lines,  Switzerland  has  as  yet  no  developed  and  progressive 
workingmen's  insurance  laws  in  operation.  A  measure,  however,  is 
now  almost  ready  for  final  approval.  This  combines  accident 

73 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

and  sickness  insurance  and  is  the  result  of  continuous  effort  on 
the  part  of  the  government  for  more  than  a  quarter  of  a  century. 

Yet  Switzerland  was  one  of  the  first  countries  in  Europe 
to  adopt  the  theory  of  compensation  of  workmen  for  indus- 
trial accidents,  instead  of  the  theory  of  liability  of  employers  for 
negligence  only.  As  early  as  1875,  a  federal  law  imposed  upon 
railroad  and  steamship  companies,  liability  for  accidents  to  em- 
ployes, even  if  such  were  not  due  to  the  employer's  negligence. 
Further  improvements  in  this  direction  affecting  transportation 
companies  were  made  in  1878,  1889  and  1897,  and  a  final  revision 
and  extension  in  1905. 

The  same  fundamental  idea  was  expressed  in  the  law  of 
March  23,  1877,  regarding  work  in  factories,  and  was  confirmed 
and  extended  by  the  law  of  June  25,  1881.  That  of  April  26, 
1887,  extended  previous  enactments  to  cover  other  industries, 
particularly  building,  transportation,  general  contracting,  rail- 
ways, street  and  bridge  operations,  mines  and  quarries.  The 
law  of  April  5,  1894,  applied  the  principle  to  the  postal  service, 
and  that  of  June  24,  1902,  to  certain  specified  industries,  among 
which  is  electrical  installation.  All  manufactories  in  which  acci- 
dents are  likely  to  occur  are  included.  Compensation  in  event 
of  death  comprises  cost  of  medical  treatment  and  medicines,  loss 
of  time  due  either  to  complete  or  partial  incapacity  of  the  in- 
jured prior  to  his  decease,  expense  of  burial  and  a  benefit  to 
dependents.  In  case  of  injuries  or  sickness  caused  by  occupation, 
the  employer  must  pay  the  charges  of  medical  treatment  and 
medicines  during  partial  or  complete  incapacity.  Maximum 
compensation  for  the  above  must  not  exceed  six  times  the 
yearly  earnings,  or  6000  francs  ($1,200).  Useful  as  was  this 
liability  law,  it  had  for  a  long  time  appeared  to  the  Federal 
Assembly  that  a  uniform  and  comprehensive  accident  insurance 
scheme  for  workingmen  was  needed.  Nothing  was  done,  however, 
until  March,  1885,  when  the  Federal  Council  was  instructed  by  the 
Assembly  to  prepare  a  report  and  a  bill  for  the  introduction  of 
general,  obligatory,  state  accident  insurance  of  workingmen. 

This  request  led  to  the  bill  of  1898  which  covered  sickness 
and  accident  and  created  a  single  accident  insurance  institution 
for  the  entire  country.  The  chief  provisions  for  accident  insurance 

74 


SWITZERLAND 

made  all  workmen  subject  to  compulsory  insurance,  premiums  to 
be  paid  by  their  employers.  Workmen  were  also  to  be  obliged  to 
carry  sickness  insurance.  The  latter  might,  however,  also  insure 
themselves  voluntarily  if  they  were  members  of  private  sickness 
insurance  societies.  In  case  of  temporary  incapacity,  workmen 
were  to  receive  medical  treatment  and  sick  benefits;  in  case  of 
permanent  incapacity  an  annuity  of  60  per  cent  of  their  wages,  and 
in  event  of  death,  a  funeral  benefit  of  from  20  francs  to  40  francs 
($4.00  to  $8.00)  was  to  be  paid  and  a  pension  to  the  dependents, 
the  aggregate  not  to  exceed  50  per  cent  of  the  wages.  Premiums 
were  regulated  according  to  the  risk  involved  in  the  occupation 
and  the  amount  of  the  payroll.  The  state  was  to  contribute 
one-fifth  of  the  total  cost;  the  remainder  to  be  paid  by  the  em- 
ployer, who  might  deduct  one-fourth  of  his  share  of  the  cost 
(namely,  one-fifth  of  the  whole)  from  the  wages  of  his  employes. 

This  bill  was  adopted  by  the  Assembly  October  5,  1899;  but 
as  it  rather  ruthlessly  rode  over  the  existing  sickness  insurance 
societies  *  in  an  attempt  to  bring  about  what  was  virtually  a  state 
monopoly  of  this  form  of  insurance,  it  was  rejected  by  an  over- 
whelming vote  on  a  referendum.  The  sole  provision  for  industrial 
accidents  at  the  present  time  is  therefore  contained  in  the  various 
liability  laws  already  referred  to.f  The  following  table  shows  their 
operation  in  the  different  industries. 

TABLE     II. — NUMBER     EMPLOYED,    ACCIDENTS    AND    COMPENSATION 
PAID    IN    FACTORIES    AND   TRADES,    1888-1902 


Number 

ACCIDENTS 

Aggregate 

\f 

employed,  in 

C  ompensaUon 

Year 

Factories  and 

Factories 

Trades 

Total 

Paid 

Trades 

(Francs) 

1888 

'57-359 

4,071 

1,958 

6,029 

835,519.70 

1890 

169,999 

5,501 

4.428 

9,929 

1,507,461.80 

1892 

188,183 

7.459 

6,052 

13,511 

1,850,498.69 

1894 

196,481 

8,442 

6,241 

14.683 

2,148,601.87 

1896 

207,045 

'0,554 

8,234 

18,788 

2,845,108.87 

1898 

212,618 

12,387 

9,"7 

21,504 

3,366,61  1.71 

1899 

240,978 

12,861 

10,265 

23,126 

4,037,748.09 

1900 

242,791 

'2,495 

10,490 

22,985 

3,696,171.79 

1901 

242,534 

12,069 

10,805 

22,784 

3,826,778.41 

1902 

247,510 

11,972 

11,085 

23,057 

3,629,623.24 

*  For  fuller  details  see  Sickness  Insurance  in  Switzerland,  page  216. 
f  The  latest  information  on  the  subject,  received  too  late  to  be  used  here, 
will  be  found  in  Appendix  III. 

75 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

No  further  move  toward  insurance  of  workingmen  was  made 
until  1906,  when  a  special  commission  was  appointed  to  study 
the  question.  Its  report  forms  the  insurance  scheme  now  before 
the  Federal  Council  which  it  is  believed  will  be  enacted  into  law. 

It  is  important  to  note  that  this  measure,  which  was  drafted 
after  an  exhaustive  study  of  the  systems  in  operation  in  the  other 
European  countries,  is  fashioned  chiefly  upon  that  of  Austria. 
Because  of  the  small  size  of  the  country  and  the  small  number 
of  workers  in  the  several  industries,  the  German  type  of  mutual 
association  of  employers  in  similar  trades,  "  Berufsgenossen- 
schaften,"  was  discarded,  and  in  its  place  it  is  planned  to  establish 
a  central  insurance  department  monopolistic  in  character,  to 
which,  as  in  Austria,  both  the  employers  and  employes  shall 
contribute.  Switzerland  has,  however,  gone  beyond  all  coun- 
tries in  recognizing  the  obligation  of  the  state  itself,  and  in  the 
new  bill  proposes  that  the  government  shall  contribute  an 
amount  equal  to  one-half  of  one  per  cent  of  the  total  wages  of 
the  insured.  The  remainder  of  the  cost  is  to  be  borne,  three- 
fourths  by  the  employer  and  one-fourth  by  the  employes. 

Definite  reasons  were  assigned  for  requiring  employes 
to  contribute,  the  most  important  being  that  the  insurance  is 
to  cover  not  only  industrial  accidents  but  all  others.  Debates 
over  this  point  in  the  lower  house  were  long  and  frequently 
acrimonious.  Eventually  the  bill  was  amended  so  as  to  satisfy 
all  parties,  by  incorporating  the  following  provision:  If  the  pro- 
portion of  non-industrial  accidents  to  industrial  accidents  proves 
to  be  larger  than  the  proportion  of  the  combined  contributions 
of  workingmen  and  government,  the  Federal  Council  may,  with 
the  consent  of  the  Assembly,  increase  the  contribution  of  working- 
men  or  reduce  benefits  granted  for  non-industrial  accidents.  It 
was  estimated  at  the  time  the  bill  was  debated  that  non-indus- 
trial accidents  would  amount  to  about  13  per  cent  of  the  whole 
number  and  call  for  about  18  per  cent  of  the  total  benefits. 

The  bill  provides  for  the  creation  of  a  state  accident  insur- 
ance department,  with  headquarters  in  Lucerne,  the  manager 
to  be  chosen  by  the  Federal  Council  on  recommendation  of  the 
administrative  council  of  the  department.  This  latter  council 
is  to  be  composed  of  sixteen  representatives  of  employers,  six 

76 


SWITZERLAND 

of  workingmen,  and  eight  of  the  Federal  Assembly,  each  elected 
for  six  years;  provision  is  also  made  for  representation  of  persons 
who  may  insure  themselves  voluntarily.  The  representatives  of  the 
voluntarily  insured,  however,  under  no  circumstances  may  exceed 
one-third  the  total  membership  of  the  administrative  council. 

The  measure  seeks  to  bring  about  the  greatest  possible 
co-operation  between  employers  and  workingmen,  and  a  clause 
provides  that  trade  unions  and  similar  organizations  may  be 
called  upon  for  advice  in  the  selection  of  the  council,  as  to 
preventive  measures  against  accidents,  in  fixing  premiums,  and 
in  thoroughly  systematizing  the  voluntary  insurance  scheme. 
Nor  has  the  Assembly  been  half-hearted  in  furnishing  ade- 
quate support  to  make  the  department  efficient.  The  bill  pro- 
vides for  an  appropriation  of  10,000,000  francs  (f 2,000,000)  on  the 
part  of  the  government,  of  which  7,000,000  francs  ($1,400,000)  are 
to  be  permanently  invested,  the  proceeds  to  be  used  for  adminis- 
trative purposes.  The  remaining  3,000,000  francs  ($600,000)  form 
a  nucleus  for  a  reserve  fund,  of  which  a  maximum  of  1,000,000 
francs  ($200,000)  a  year  may  be  used  to  meet  deficiencies.  Should 
the  reserve  fund  at  any  time  fall  below  3,000,000  francs  ($600,000) 
any  surplus  in  the  fund  for  administration  expenses  may  be  trans- 
ferred to  the  reserve.  The  bill  provides,  also,  that  the  government 
shall  pay  the  expenses  of  organizing  the  department  and  shall 
annually,  out  of  the  budget,  meet  one-fourth  of  the  administra- 
tion expenses.  The  department  will  also  be  relieved  from  dues 
and  taxes  of  every  kind,  use  of  the  mails  and  post-checks  being 
placed  at  its  service  without  charge. 

The  most  novel  and  radical  feature  of  the  measure,  how- 
ever, is  the  use  the  department  may  make  of  sickness  societies 
as  its  agencies.  It  is  authorized  to  contract  with  these  to  carry 
on  its  work  within  the  limits  of  their  respective  activities. 
They  may,  for  example,  collect  premiums,  pay  benefits,  and  exer- 
cise general  supervision  over  all  accident  cases;  they  are  to 
be  reimbursed  for  their  expenses  by  the  department  out  of  the 
premiums  collected  and,  in  addition,  are  to  receive  compensation 
for  their  services.  The  department  may  also  arrange  with  the 
societies  for  reinsurance  of  its  risks  in  accident  cases  when  in- 
capacity or  invalidity  does  not  last  longer  than  six  weeks.  Any 

77 


INSURANCE    AGAINST   INDUSTRIAL  ACCIDENTS 

loss  which  the  sickness  societies  may  suffer  during  the  early  years 
by  reason  of  such  reinsurance  is  made  good  by  the  department. 

Through  this  co-operation  of  the  department  and  the 
societies,  it  is  believed  that  simulation  and  collection  of  double 
benefits  will  be  prevented,  and  the  administration  of  the  details 
of  the  insurance  scheme  be  placed  where  in  all  probability  it  can 
best  be  handled.  To  avoid  malingering  as  far  as  possible  it  is 
provided  that  if  the  insured  receives  benefits  from  several  sources 
the  total  amount  shall  not  exceed  his  average  wage.  The 
difficulties  that  have  arisen  in  England,  where  no  connection 
exists  between  the  friendly  societies  and  the  insurance  companies 
making  awards  under  the  Workmen's  Compensation  Act,  will 
thus  be  overcome. 

In  establishing  the  central  insurance  department,  consider- 
ation was  given  to  the  feasibility  of  making  use  of  private  acci- 
dent insurance  companies  doing  business  in  Switzerland.  It  was 
feared,  however,  that  if  option  was  given  to  the  employer  to 
insure  in  the  state  department  or  in  a  private  company,  the 
latter  would  accept  only  the  good  risks  and  the  state  be  com- 
pelled to  carry  all  the  doubtful  ones.  The  Assembly  therefore 
decided  that  accident  insurance  must  be  compulsory  and  be 
carried  on  by  the  state  itself.  Insurance  will  be  required  of  the 
following  classes  of  workingmen:  employes  of  railways,  steam- 
ships, the  post  office,  industries  coming  under  the  law  of 
March  23,  1877,  and  the  manufacture  of  explosives.  It  will  also 
be  compulsory  in  the  following  occupations  if  more  than  five 
workmen  are  employed:  building  trades,  transportation,  shipping, 
construction  and  repair  of  telephones,  telegraphy,  machinery,  gen- 
eral contracting  and  tunnelling,  mines,  quarries,  and  the  building 
of  streets,  bridges,  water  mains,  sewers,  etc.  In  all  of  these  oc- 
cupations not  only  adult  workmen  but  apprentices  are  included. 
Insurance  takes  effect  on  the  day  of  employment,  the  right  to  it 
not  being  interrupted  if  the  workman  is  temporarily  engaged 
with  a  Swiss  employer  in  another  country. 

Broad  powers  are  vested  in  the  department.  It  is 
given  authority  to  set  up  tables  of  premiums  for  the  various 
industries  included  in  the  bill.  It  may  require  the  employer  to 
pay  premiums  in  advance  on  the  basis  of  his  payroll  during  the 

78 


SWITZERLAND 

previous  year,  the  same  to  be  readjusted  at  the  end  of  the  year; 
may  establish  rules  and  regulations  for  the  prevention  of  acci- 
dents, binding  on  the  employer,  and  may  also  require  him  to 
introduce  safety  devices.  To  assist  the  department  in  this  work, 
the  Federal  Council  will  arrange  for  the  co-operation  of  federal 
factory  inspectors.  In  setting  up  the  tariffs  of  premiums,  which 
are  based  on  the  payroll  and  may  be  varied  from  year  to  year  if 
experience  justifies  it,  the  department  may  divide  the  various 
industries  into  definite  danger  classes  with  subdivisions  within  the 
same  danger  class,  according  to  the  inherent  risk.  Contributions 
of  the  employes  are  to  be  made  through  the  employer  by  deduc- 
tions from  wages. 

As  has  been  said,  the  department  is  to  insure  against  all 
accidents  resulting  in  disability,  permanent  invalidity  or  death, 
whether  due  to  employment  or  not.  The  insured  or  his  family 
is  required  to  give  his  employer  immediate  notice  of  an  acci- 
dent, and  the  employer  is  to  notify  the  department.  The  in- 
sured is  entitled  to  medical  treatment  and  medicines  from  the 
day  of  accident,  to  free  medical  appliances,  and  to  all  other 
means  of  cure,  including  even  cost  of  transportation.  Benefits 
amounting  to  80  per  cent  of  the  daily  wage — the  largest  per- 
centage allowed  in  any  European  country — are  to  be  paid  from 
the  third  day  of  injury  unless  invalidity  lasts  longer  than  three 
weeks,  when  benefits  will  be  paid  from  the  day  of  accident. 

It  is  of  interest  to  note  that  the  injured  workman  is  given 
the  right  to  free  choice  of  any  physician  licensed  under  the  Swiss 
law.  The  free  choice  of  physician  has  been  much  discussed 
in  countries  where  there  is  compulsory  sickness  and  accident 
insurance,  and  it  is  still  one  of  the  most  vexed  questions  in  the 
administration  of  these  laws.  France  is  on  the  point  of  with- 
drawing this  privilege,  but  Switzerland  has  taken  the  attitude 
that  the  individual  has  the  right  to  choose.  The  department  is 
empowered  to  set  up  fees  which  the  physician  may  charge,  and 
it  will  not  be  responsible  for  anything  in  excess  of  these  rates. 
The  names  of  all  physicians  willing  to  render  professional  services 
at  the  prescribed  fees  will  be  published.  If,  after  continued 
treatment,  there  is  no  apparent  improvement  in  the  condition 
of  the  injured  person  and  he  remains  permanently  incapaci- 

79 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

tated,  the  ordinary  benefits  cease.  He  then  receives  an  invalidity 
pension,  amounting,  in  case  of  complete  permanent  incapacity,  to 
70  per  cent  of  his  yearly  earnings.  The  granting  of  this  pension 
may  be  reviewed  within  a  period  of  three  years  to  determine 
whether  it  may  not  be  possible  to  reduce  or  even  to  withdraw  it; 
after  this  period,  such  a  review  is  no  longer  permitted. 

In  case  of  death  resulting  from  accident,  the  department 
pays  the  cost  of  burial,  and,  in  addition,  provides  pensions  for 
the  heirs,  the  aggregate  not  to  exceed  60  per  cent  of  the  average 
yearly  wages.  Pensions  are  as  follows:  to  the  widow  until  her 
death  or  re-marriage  30  per  cent,  or  to  the  widower,  in  case  he  is 
permanently  incapacitated  or  should  become  so  within  five 
years  after  the  death  of  his  wife,  20  per  cent  until  his  death  or 
re-marriage;  to  each  legitimate  surviving  child  15  per  cent  and 
if  the  other  parent  is  dead  or  dies,  25  per  cent,  continuing  until 
the  sixteenth  year,  or,  if  the  child  is  permanently  incapacitated, 
until  seventy  years  from  the  birth  of  the  insured.  Provision  is 
also  made  for  relatives  in  the  ascending  line,  if  they  are  unable 
to  support  themselves,  and  for  dependent  brothers  and  sisters 
until  they  reach  their  sixteenth  year.  These  two  groups  of  heirs 
may  together  receive  an  aggregate  not  exceeding  20  per  cent  of 
the  average  yearly  wage. 

Accidents  caused  by  the  wilful  act  of  the  insured  do  not 
entitle  him  to  benefits,  except  in  fatal  cases,  when  the  cost  of 
burial  is  allowed;  and  the  amount  may  be  reduced  where  gross 
carelessness  on  the  part  of  the  insured  has  been  demonstrated. 
Attempts  to  secure  a  benefit  by  fraud  constitute  a  misdemeanor 
punishable  by  a  fine.  In  case  of  permanent  incapacity  a  pension 
is  given  during  invalidity.  Where  the  physical  condition  of  the 
person  may  be  improved,  however,  the  pension  may  be  capitalized 
and  the  amount  paid  outright. 

The  department  is  authorized  to  grant  accident  insurance 
to  the  following,  not  included  in  the  compulsory  clause,  who  are 
at  least  fourteen  years  old,  have  been  residents  of  Switzerland 
for  at  least  one  year,  and  whose  incomes  do  not  exceed  3000 
francs  ($600)  a  year:  employes  and  workmen  in  agriculture  and 
forestry,  small  trades,  commerce,  hotels,  home  work,  domestic 
service  and  ordinary  day  labor,  and  others  engaged  in  these 

80 


ITALY 

industries  not  as  employes  or  workmen,  or  if  their  employes 
and  workmen  are  insured  in  the  department.  To  encourage  the 
voluntary  insurance  of  these,  the  government  will  contribute 
towards  their  premiums  one-half  of  one  per  cent  of  their  re- 
spective wages.  In  addition,  the  right  is  given  to  every  citizen 
of  Switzerland  who  has  passed  his  fourteenth  year,  irrespective 
of  income,  to  insure  himself  against  accident  in  the  department, 
without,  however,  being  able  to  call  upon  the  government  for  a 
contribution. 

At  the  present  time  428,000  workingmen  are  entitled  to 
benefits  under  the  liability  laws.  With  the  passage  of  the  above 
compulsory  insurance  measure,  the  number  covered  will  be  at 
least  600,000,  or  about  19  per  cent  of  the  population.  At  an 
average  wage  of  1 200  francs  per  annum  ($240)  this  would  make  a 
total  payroll  of  720,000,000  francs  (1144,000,000).  The  average 
net  premium  is  estimated  at  2.83  per  cent  of  the  payrolls,  and 
management  expenses  at  0.33  per  cent  additional.  The  total  pre- 
mium, therefore,  is  estimated  at  3.16  per  cent.  The  expenses  of 
accident  insurance  will  then  be  distributed  as  follows :  ^  ^ 

TABLE  12. — ESTIMATED  TOTAL  AND  DISTRIBUTION  OF  EXPENDITURE 
FOR   ACCIDENT    INSURANCE 

Total  Expenditures       Per  cent  of  Per  Cent  of 

(Francs)                   Total  Wages 

Government    .       .       .         3,600,000                      16  0.50 

Employers       .       .       .       14,364,000                     63  2.00 

Workingmen    .       .       .         4,788,000                     21  0.66 


Total        .       .       .       22,752,000  loo  3.16 

The  government  also  defrays  the  cost  of  the  insurance 
tribunals,  which  it  is  estimated  will  amount  to  91,000  francs 
($18,200).  It  is  estimated  that  its  annual  expenditure  on  ac- 
count of  both  sickness  and  accident  insurance  will  reach  a  total 
of  8,191,000  francs  (11,638,200). 

ITALY 

Italy  for  the  first  time  recognized  the  principle  of  work- 
men's compensation  for  industrial  accidents  in  1898,  when  a  com- 
pulsory accident  insurance  law  was  passed.  Until  that  year,  in- 
dustrial accidents  like  other  damages  were  subject  to  the  civil 

6F  8l 


INSURANCE    AGAINST    INDUSTRIAL    ACCIDENTS 

code,  and  compensation  could  be  recovered  only  on  the  presenta- 
tion of  proof  of  negligence  on  the  part  of  the  employer.  The 
rapidly  developing  industrial  life  of  the  country,  however,  had 
made  it  clear  that  this  provision  was  entirely  inadequate,  and  to 
relieve  the  situation,  what  is  known  as  the  "Cassa  Nazionale  di 
Assicurazione  per  gli  Infortuni  degli  Operai  sul  L'avoro,"  or  the  Na- 
tional Accident  Insurance  Fund,  was  established  in  1883.  The 
creation  of  this  institution  was  the  result  of  an  agreement  between 
the  Minister  of  Agriculture,  Industry  and  Commerce,  and  the  rep- 
resentatives of  ten  of  the  most  important  savings  banks,  who 
thus  hoped  to  supply  a  cheaper  form  of  insurance  to  employers, 
and  to  give  employes  protection  against  industrial  accidents  to  a 
greater  extent  than  was  possible  under  the  civil  law  or  under  such 
arrangements  for  insurance  as  then  existed. 

This  institution  is  not  a  state  department.  It  is  conducted 
by  the  savings  banks  already  referred  to  and  was  simply  recog- 
nized by  the  government  as  its  official  agent,  which  placed  at  its 
disposal  the  services  of  postal  savings  banks  and  officials  of  the 
communes,  to  make  collections  and  disbursements.  Following  the 
same  policy,  the  internal  organization  of  the  bank  was  regulated 
by  law,  the  government  reserving  the  right  to  review  its  rules  and 
regulations  and  revise  its  rates  every  five  years.  On  the  other 
hand,  the  administration  was  autonomous,  and  insurance  in  it 
purely  voluntary,  there  being  no  compulsion  upon  either  em- 
ployer or  employe.  The  National  Accident  Insurance  Fund  was, 
therefore,  from  its  very  beginning,  similar  in  its  operations  to 
an  ordinary  insurance  company.  It  was  able,  however,  to  make 
much  lower  rates  for  the  reason  that  the  savings  banks  which 
founded  it  did  not  expect  a  profit,  and  because  expenses  of  man- 
agement, through  the  co-operation  of  the  post  office  and  the 
communes  and  through  the  removal  of  the  stamp  tax,  were  much 
reduced. 

In  general,  the  purpose  of  the  fund  is  to  insure  working- 
men  against  industrial  accidents  which  result  in  either  death, 
total  or  partial  incapacity,  or  temporary  disability  lasting  longer 
than  four  weeks.  Since  1887,  this  period  has  been  reduced  to 
five  days.  Three  forms  of  insurance  are  offered:  (i)  insurance 
taken  out  by  an  individual  workingman;  (2)  collective  insurance, 

82 


ITALY 

under  which  contracts  are  made  by  employers,  mutual  aid  socie- 
ties (Societa  di  Mutuo  Soccorso),  or  by  others  to  cover  an  entire 
group;  (3)  collective  insurance,  covering  not  only  insurance  of 
workingmen  against  accidents,  but  the  liability  of  the  employer 
under  the  law,  paid  for  by  employers  or  by  both  employers  and 
employes. 

Insurance  benefits  are  granted  by  payment  of  a  single  amount 
or,  at  the  request  of  the  injured  workman,  may  be  converted  into 
an  annuity,  payable  for  a  definite  period  of  time,  or  through- 
out life.  In  case  of  death,  the  amount  paid  is  not  to  exceed 
10,000  lire  ($2,000);  for  total  and  permanent  disability  the  sum 
is  the  same  as  would  be  paid  in  case  of  death;  for  permanent, 
partial  incapacity,  it  is  proportionate  to  the  degree  of  impairment 
and  to  the  sum.  payable  in  case  of  total  disability;  for  tem- 
porary disability,  daily  benefit  as  promised  in  the  policy,  for  a 
period  not  to  exceed  360  days.  As  a  rule,  the  amount  payable 
at  death  or  in  event  of  total  and  permanent  incapacity  is  1000 
lire  ($200)  and  the  daily  benefit  in  cases  of  temporary  disability 
one  lira  (20  cents). 

The  development  of  this  fund,  notwithstanding  the  many 
attempts  made  by  the  government  and  by  its  honorary  members 
to  forward  it,  was  not  encouraging.  In  1897,  there  were  only 
4311  policies,  covering  162,855  workmen,  the  same  reason  for 
small  numbers  having  prevailed  here  as  in  France;  namely,  that 
insurance  was  voluntary  and  that,  under  such  a  system,  those  who 
need  it  most  are,  as  a  rule,  precisely  those  who  do  not  apply 
for  it. 

To  remove  difficulties,  reduce  the  expense  of  prosecu- 
tions for  damages  under  the  civil  code,  and  to  supplement  the 
act  of  1883,  the  compulsory  insurance  law  of  1898  was  passed. 
This,  however,  was  not  easily  accomplished.  Ingrained  in  the 
Latin  people  is  the  idea  of  personal,  rather  than  state,  respon- 
sibility; and  it  was  extremely  difficult  to  overcome  this  concep- 
tion and  substitute  the  principle  underlying  the  laws  of  Germany 
and  other  countries.  Since  1879,  commission  after  commission 
had  been  appointed  and  bills  reported,  varying  greatly,  but  all 
centered  around  the  idea  of  transferring  the  burden  of  proof 
from  employe  to  employer,  some  of  the  later  measures  even  pro- 

83 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

posing  to  establish  a  system  of  compulsory  insurance.  All  proved 
unacceptable. 

After  the  passage  of  the  German  law  of  1884,  the  con- 
viction that  industry  should  bear  the  burden  of  accidents  oc- 
curring in  it  influenced  the  recommendations  of  all  Italian 
commissions.  The  legislature,  however,  contended  that  the  em- 
ployer's sense  of  personal  responsibility  would  thus  be  diminished, 
and  industry  too  heavily  burdened.  This  was  shown,  however, 
to  be  untenable.  In  the  National  Accident  Insurance  Fund 
the  average  yearly  premium  was  3.87  lire  (77  cents)  per  work- 
ingman  insured,  and  the  new  tariff  proposed  to  increase  this 
premium  to  only  six  lire  ($1.20).  An  increase  of  two  centimes  per 
working  day  per  man  (about  four-tenths  of  a  cent)  would  not 
materially  burden  industry,  particularly  as  the  state's  experience 
demonstrated  that  the  total  cost  for  accidents  would  not  be  more 
than  2  per  cent  of  the  wages. 

This  argument,  together  with  the  poor  record  shown  by 
the  National  Accident  Insurance  Fund,  led  the  way  in  1897  to  the 
compulsory  insurance  law  that  was  enacted  in  1898.  Like  the 
German  and  Austrian  laws  it  included  mining,  quarrying,  the 
manufacture  of  gas,  electricity,  explosives,  etc. ;  in  fact  all  indus- 
tries in  which  machines  are  used  and  where  more  than  five  work- 
men are  employed.  It  includes  all  workmen  and  laborers  in  these 
industries,  together  with  apprentices,  with  wages  not  exceeding 
seven  lire  per  day  ($1.40).  Farmers,  foresters,  sailors,  merchants, 
home-workers,  and  small  tradesmen,  are  not  included.  It  was 
assumed  that  from  1,500,000  to  1,750,000  of  the  2,000,000  indus- 
trial wage-earners  would  come  under  the  law,  and  that  the  total 
insurance  premiums  would  amount  to  10,000,000  lire  ($2,000,000) 
per  annum.  Insurance  is  paid  for  by  the  employer,  and  covers 
all  industrial  accidents  if  disability  endures  beyond  five  days.  It 
was  not  deemed  advisable  to  make  this  period  longer  for  the  reason 
that  there  was  no  compulsory  sickness  insurance  in  Italy,  and 
delayed  compensation  would  leave  the  injured  uncared  for. 

The  value  of  the  indemnity  to  be  paid  in  case  of  total  and 
permanent  invalidity  continuing  after  three  months,  is  five  times 
the  annual  wages,  but  not  to  exceed  3000  lire  ($600).  In  excep- 
tional cases,  this  indemnity  is  paid  in  one  lump  sum,  but  usually 

84 


ITALY 

in  the  form  of  a  pension.  In  cases  of  permanent  partial  disability, 
five  times  the  amount  of  impairment  of  yearly  earning  power  is 
granted,  and  for  temporary  complete  disability,  benefits  equal  to 
half  the  average  wage  earned  during  the  five  preceding  weeks; 
for  temporary  partial  disability,  an  equivalent  of  half  the  impair- 
ment of  earning  power  based  upon  such  average  wages,  and  in 
case  of  death  by  industrial  accident,  a  sum  equal  to  five  times 
the  yearly  wages,  is  paid  dependents.  In  addition  to  these  pro- 
visions, the  employer  must  pay  for  immediate  medical  attendance 
and  medicines.  In  event  of  an  award  for  permanent  disability, 
the  workingman,  the  employer,  or  the  insurance  company  may 
ask  after  two  years  for  a  re-examination,  to  determine  whether 
disability  payments  should  be  continued,  and  if  continued,  should 
be  increased  or  diminished. 

Insurance  of  employes  is  compulsory;  but  considerable  lati- 
tude is  granted  employers  as  to  the  company  in  which  they 
shall  insure  the  workmen.  This  may  be  with  the  National  Acci- 
dent Insurance  Fund,  described  above,  with  any  insurance 
company  authorized  to  carry  on  business  in  Italy  and  subject 
to  special  regulations  of  the  government,  or  in  private  accident 
insurance  funds,  established  at  their  own  cost.  The  latter  funds 
must  provide  for  the  insurance  of  more  than  500  workingmen,  be 
approved  by  the  government,  and  supply  benefits  at  least  as  great 
as  those  under  the  law;  and  the  employer  must  deposit  with  the 
treasury  securities  issued  or  guaranteed  by  the  state,  to  the  value  of 
not  less  than  five  times  the  annual  premium  which  would  have 
been  payable  to  the  National  Accident  Insurance  Fund  had  the 
workmen  been  insured  with  it.  Should  any  such  private  fund 
fail  to  meet  its  obligations,  the  employer  remains  responsible. 

The  act  also  exempts  from  obligation  to  insure  elsewhere 
those  employers  who  join  to  form  a  mutual  insurance  society, 
if  the  number  of  workingmen  insured  in  such  society  is  not  less 
than  4000.  It  must  be  officially  approved,  and  the  security 
deposited  be  equivalent  to  10  lire  ($2.00)  for  each  workman  em- 
ployed, but  not  exceeding  500,000  lire  ($100,000).  Upon  its  for- 
mation its  members  must  pay  into  it  an  amount  equal  to  one- 
half  the  premiums  which  would  have  been  paid  had  the  work- 
men been  insured  with  the  National  Accident  Insurance  Fund; 

85 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

and  at  the  beginning  of  every  subsequent  year  they  must  pay  in 
advance  annual  premiums,  the  amounts  of  which  are  determined 
on  the  basis  of  claims  upon  the  society  in  the  preceding  year. 
Members  of  such  a  mutual  society  are  jointly  and  severally  liable 
for  all  claims  against  the  society,  and  all  contributions  due  from 
them  are  recoverable  summarily  by  the  same  means  as  taxes. 

It  was  not  long  before  another  important  extension  of 
the  accident  law  was  made.  In  1901,  the  government  presented 
to  the  House  of  Deputies  a  measure,  the  purpose  of  which  was 
to  widen  the  scope  of  the  law  of  1898,  improve  its  practical  work- 
ings and  increase  compensation.  The  new  statute  was  passed 
in  1903  and  went  into  effect  one  year  later.  The  important 
changes  introduced  by  it  were  as  follows:  In  case  of  permanent 
total  incapacity,  the  present  value  of  the  indemnity  was  fixed 
at  six  times  the  yearly  wages,  instead  of  five  times,  as  in  the 
law  of  1898,  the  minimum  sum  now  being  3000  lire  ($600)  and 
the  maximum  12,000  lire  ($2,400),  besides  a  compensation  of 
one-half  the  daily  wages  for  the  first  90  days  after  the  accident, 
In  case  of  permanent,  partial  incapacity,  a  proportionate  daily 
allowance  was  given  for  90  days,  and  six  times  the  present 
value  of  the  impairment  in  earning  power,  the  minimum  being 
500  lire  ($100).  Compensation  for  all  disabilities  lasting  more 
than  five  days  begins  from  the  first  day. 

The  law  was  also  extended  to  cover  accidents  to  seamen, 
compensation  for  which,  however,  is  based  on  a  somewhat  modi- 
fied schedule.  In  case  of  permanent  and  total  disability,  they 
receive  indemnities  to  the  value  of  four  times  the  yearly  wages, 
minimum  sum  2000  lire  ($400) ;  in  case  of  permanent  partial  dis- 
ability, compensation  to  the  value  of  four  times  the  difference  in 
wages,  minimum  500  lire  (fioo).  In  case  of  death,  three  times 
the  yearly  wages  is  paid  in  one  sum  to  dependents. 

Another  section  empowers  the  government  to  establish 
compulsory  insurance  societies  in  particular  cases  if  the  nature 
of  the  trade  or  other  peculiar  local  conditions  make  it  necessary 
to  better  insure  the  carrying  out  of  the  purpose  of  the  law.  Each 
such  compulsory  society  must  embrace  at  least  15,000  work- 
men. This  section  was  passed  in  order  to  provide  for  local  con- 
ditions prevailing  in  the  sulphur  mines  of  Sicily,  and  soon  after 

86 


ITALY 

its  passage  such  a  society,  composed  of  900  employers  and  40,000 
workmen  engaged  in  the  sulphur  industry,  was  formed.  Another 
similar  society  was  organized  to  protect  seamen  and  fishermen  of 
the  southern  provinces  of  the  mainland. 

At  the  adoption  of  the  above  law  in  1903,  a  joint  reso- 
lution was  passed  in  Parliament  requesting  the  administration  to 
propose  a  measure  for  the  settlement  of  disputes  arising  out  of  dis- 
agreements for  compensation  for  industrial  accidents.  As  a  result 
a  bill  now  before  Parliament  was  proposed  on  March  13,  1908,  the 
underlying  idea  of  which  is,  that  as  nearly  all  disputes  which  arise 
are  of  a  technical  nature  either  with  reference  to  conditions  under 
which  the  accident  took  place  or  to  the  degree  of  impairment,  a 
commission  of  arbitration  shall  be  organized  composed  of  a  judge, 
a  physician  and  an  engineer  whose  duty  it  shall  be  to  hear  such 
disputes.  Proceedings  before  a  commission  will  be  less  formal 
than  before  the  courts  and  more  summary. 

The  figures  in  Table  1 3,  page  88,  represent  the  latest  obtain- 
able data  on  accident  insurance  in  Italy. 

The  problem  of  the  prevention  of  accidents  has  developed 
an  interesting  situation  in  Italy.  From  Table  13  (item  3)  it  is 
clear  that  in  operation  neither  the  Workmen's  Compensation 
Act  nor  the  sickness  insurance  societies,  have  done  much  to 
prevent  accidents.  The  law  of  1898  placed  this  important  mat- 
ter in  the  hands  of  the  Minister  of  Agriculture,  Industry  and 
Commerce.  Upon  the  recommendation  of  employers  and  factory 
officials,  he  was  to  prescribe  the  necessary  rules  and,  after  ac- 
ceptance of  them,  it  was  his  duty  to  oversee  their  proper  enforce- 
ment. As  government  factory  inspection  had,  until  then,  been 
confined  entirely  to  mining,  he  was  permitted  to  make  use  of  the 
technical  personnel  of  societies  and  accident  insurance  com- 
panies for  the  prevention  of  accidents. 

This  law  was  practically  a  compromise  between  two  op- 
posing factions  in  Parliament,  one  contending  that  the  entire 
question  of  accident  prevention  should  be  a  matter  for  the  state; 
the  other,  that  it  should  be  left  to  individual  initiative  and  insur- 
ance companies.  As  a  result  a  most  interesting  institution 
has  been  developed.  This  is  a  mutual  organization  of  employers 
for  the  prevention  of  accidents  and  the  introduction  of  safety 

87 


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GERMANY 

devices.  It  is  called  the  "Associazone  degli  Industriali  d'ltalia 
per  Prevenire  gli  Infortuni  de  Lavoro"  and  its  headquarters  are  at 
Milan.  It  is  said  to  have  been  more  effectual  in  causing  em- 
ployers to  introduce  means  of  prevention  than  all  other  influences 
combined.  Its  inspections  are  extremely  thorough  and  the  state 
accepts  its  reports  in  substitution  for  its  own  inspections. 

The  society  issues  no  insurance,  but  as  a  result  of  its  activi- 
ties employers  are  often  able  to  secure  reductions  of  rates. 
Some  mutual  insurance  companies  require  their  policy  holders 
to  belong  to  this  association  and  to  conform  to  its  regulations. 
It  seems  probable,  judging  from  the  German  experience,  that 
had  this  organization  been  utilized  as  a  means  for  the  obliga- 
tory insurance  of  employers,  encouragement  of  prevention  would 
have  been  increased,  as  such  a  company  through  its  insurance 
would  acquire  practical  and  certain  knowledge  of  the  financial 
consequences  of  neglect. 

Reference  must  be  made  to  the  large  amount  of  simula- 
tion and  malingering  said  to  prevail  in  Italy  under  the  accident 
insurance  law.  This  method  of  fraud  had  become  so  extensive, 
especially  in  connection  with  the  sulphur  industry  in  Sicily, 
that  special  legislation  was  found  necessary  to  check  it.  In 
consequence,  a  tendency  toward  compulsory  insurance  of  all 
workingmen  is  unquestionably  growing  throughout  the  country. 
It  is  generally  believed  that,  should  such  a  law  be  passed,  sick- 
ness societies  would  be  employed  as  the  means  of  carrying  on  this 
insurance.  Labor  unions  would  be  satisfied  with  such  a  measure 
if  employers  were  compelled  to  pay  all  the  premiums;  possibly 
they  might  be,  even  though  compulsory  contributions  from  em- 
ployes were  called  for  also.  Little  is  to  be  expected  from  the 
unions,  however,  as  in  Italy  they  are  mainly  political  in  character. 


GERMANY 

The  most  striking  fact  in  the  remarkable  industrial  advance 
made  by  Germany  during  the  last  half  century  is  the  improved 
condition  of  the  great  body  of  its  working  people.  On  all  sides 
are  evidences  of  greater  effectiveness,  contentment  and  pros- 
perity. Many  causes  have  undoubtedly  contributed  to  this  end, 

89 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

but  perhaps  the  most  important  has  been  the  fostering  care  of  the 
government.  It  has  met  the  requirements  of  its  people  in  an 
orderly  and  businesslike  manner,  looking  upon  their  occupations 
as  both  social  and  individual  in  character.  In  nothing  is  this 
attitude  better  shown  than  in  the  comprehensive  system  of  insur- 
ance legislation,  the  beginning  of  which  was  made  a  quarter  of  a 
century  ago. 

At  the  close  of  the  war  with  France,  the  attention  of  the 
government  was  directed  to  the  adjustment  of  the  new  conditions 
which  the  unforeseen  industrial  development  had  brought  about. 
Socialism  of  the  revolutionary  type  was  everywhere  making  rapid 
strides  among  the  working  classes.  To  check  these  forces  of 
discontent,  as  well  as  to  meet  the  legitimate  demands  of  the 
people,  Bismarck,  with  remarkable  far-sightedness,  presented  his 
plan  of  obligatory  insurance  of  [workingmen  as  a  matter  of  civic 
duty.  This  embraced  three  forms  of  workingmen's  insurance; 
namely,  against  sickness,  accident  and  invalidity.  In  the  short 
period  of  nine  years,  1881-1889,  every  detail  of  this  comprehen- 
sive scheme  was  put  into  operation.  Legislation  so  far-reaching 
in  its  consequences  had  never  before  been  attempted.  Though 
at  the  time  regarded  as  revolutionary  in  character,  it  has  served 
the  country  even  better  than  its  great  author  dreamed  possible. 
Now  at  the  close  of  a  period  of  twenty-five  years,  it  is  recognized 
as  the  most  effective  instrument  for  the  protection  of  the  great 
body  of  the  people  in  the  important  exigencies  of  life;  and  its 
merits  are  warmly  appreciated  by  all  who  have  the  welfare  of 
the  nation  at  heart. 

The  wide  sphere  of  its  usefulness  is  shown  by  the  summary 
of  insurance  statistics  for  1906  in  Table  14.  In  that  year,  the 
population  of  Germany  was  61,200,000,  of  whom  no  less  than 
15,400,000,  or  more  than  one  in  four,  were  wage-earners. 

It  must  not  be  supposed,  however,  that  the  system  inaugu- 
rated in  1883,  through  the  efforts  of  Bismarck,  was  the  creation  of 
any  one  man  or  was  imposed  upon  a  people  unprepared  for  it. 
On  the  contrary,  it  was  the  last  step  in  a  long  historical  process  in 
which  we  find  blended  the  struggle  of  the  working  people  and  the 
legislative  policy  of  the  ruling  classes,  and  was  based  on  political 
principles  matured  through  decades  of  reflection  and  discussion. 

90 


GERMANY 


TABLE    14. — SUMMARY   OF    ACCIDENT,   SICKNESS,    AND    INVALIDITY 
AND    OLD    AGE    INSURANCE    STATISTICS,    1906 


Losses,  Receipts,  etc. 

Against 
Accident 

Against 
Sickness 

Against 
Invalidity 
and  Old  Age 

Persons  insured 

19,227,213 

1  2,408,706 

14,142,700 

Claimants  paid 

i  ,076,200 

4,820,900 

1,324,000 

(Marks) 

(Marks) 

(Marks) 

Receipts  *                ... 

189,708,567 

314,461,891 

263,340,791 

From  employers  . 

166,973,578 

95,510,006 

85,063,085 

From  workmen    . 

205,568,399 

85,063,085 

Disbursements,  Total 

165,964,271 

282,487,163 

182,355,360 

For  payment  of  claims 

143,161,276 

266,347,487 

166,039,147 

For  expenses 

22,802,995 

16,139,676 

16,316,213 

Amount  paid  per  claim  . 

•32-35 

55-25 

125.41 

Total  cost  per  person  insured  . 

8.63 

22.77 

15.50 

*  Total  receipts  for  sickness,  accidents  and  invalidity  insurance,  include  sums 
from  other  sources,  together  with  contributions  of  employers  and  employes. 

For  a  full  understanding  of  the  system,  as  finally  developed, 
it  is  necessary  to  make  a  rapid  survey  of  previous  legislation. 
Very  early  the  Prussian  laws  recognized  the  obligation  of  the 
master  to  care  for  his  servant  during  disability.  This  obligation 
was  implied  in  the  labor  contract  and  the  master  could  be  com- 
pelled to  pay  for  medical  attention  to  his  servant.  The  em- 
ployer was  also  held  responsible  for  accidents  to  servants  in  his 
employment  due  to  his  negligence,  and  was  bound  to  care  for 
the  injured  until  restored.  Similar  laws  protected  the  crews  of 
vessels.  In  case  of  accident  during  the  voyage,  the  master  was 
liable  for  medical  attendance,  as  well  as  for  the  expense  of  the 
voyage  home.  This  applied  even  though  the  disability  of  the 
sailor  were  from  sickness.  In  case  of  his  death  while  on  a  cruise, 
provision  was  made  for  the  support  of  his  dependents  by  the 
employer. 

Later,  Prussia  replaced  the  antiquated  common  law  by 
the  liability  law  of  November  3,  1838,  and  thus  took  the  initial 
step  in  recognizing  the  new  principle  of  the  liability  of  employers 
to  provide  compensation  for  industrial  accidents.  It  applied,  how- 
ever, to  railroad  employes  only,  and  by  the  same  act  the  com- 
panies were  made  liable  for  accidents  to  passengers  as  well. 
The  companies  were  exempt  only  in  case  they  could  prove  that 

91 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

the  accident  was  due  to  the  negligence  of  the  person  injured  or 
killed  or  to  some  unavoidable  cause,  "an  act  of  God."  Other 
kingdoms,  as,  for  instance,  Holstein,  Mecklenberg  and  the  Saxon 
duchies,  soon  adopted  similar  statutes. 

The  next  advance  was  made  through  legislation  of  a  more 
general  character.  Laws  passed  in  1845,  1849  anc^  !^54  gave 
the  greatest  encouragement  to  the  formation  of  workingmen's 
organizations  which  had  for  their  purpose  the  aiding  of  members 
in  cases  of  disability  resulting  from  sickness  or  accident.  The 
law  of  1854  was  especially  significant  in  that  it  compelled  workers 
in  certain  trades  to  join  trade  guilds  and  required  employers 
to  contribute  half  the  cost  of  their  management.  It  should  be 
noted,  however,  that  these  measures  were  not  specifically  directed 
to  the  solution  of  the  problem  resulting  from  industrial  accidents. 
A  full  treatment  of  their  provisions  as  well  as  their  influence  on 
later  insurance  legislation  will  be  found  in  the  discussion  of 
sickness  insurance  in  Germany. 

The  remarkable  development  of  machinery  and  commerce 
in  the  decades  immediately  succeeding,  called  for  an  extension  of 
the  railroad  accident  law  to  other  fields.  But  nothing  of  importance 
was  done  in  this  regard  until  after  the  founding  of  the  empire, 
when  the  liability  act  of  June  7,  1871,  was  passed.  This 
followed  the  provisions  of  the  Prussian  law  of  1838  with  regard  to 
railway  accidents,  and  also  gave  similar  protection  to  workmen  in 
mines,  quarries  and  factories.  In  the  latter  industries,  however, 
proprietors  were  bound  to  compensate  injured  workmen  only 
when  the  latter  could  prove  negligence  on  the  part  of  the  employer 
or  his  vice-principal. 

In  cases  of  temporary  or  permanent  disability  due  to  acci- 
dent, the  law  granted  compensation  for  the  cost  of  medical 
treatment  as  well  as  for  loss  of  time  or  other  financial  damage. 
In  case  of  death,  indemnification  included  cost  of  medical  treat- 
ment, necessary  funeral  expenses,  the  loss  of  time  before  death 
occurred  and  the  loss  sustained  by  the  dependents  of  the  deceased, 
the  money  value  of  such  claims  being  fixed  by  the  court.  Permis- 
sion was  granted  employers  to  insure  their  workmen  in  a  private 
company  or  in  a  miners'  benefit  or  other  association,  in  which  cases 
the  employer  paid  the  premiums  entirely  out  of  his  own  funds. 

92 


GERMANY 

Although  this  liability  law  was  a  step  in  advance,  it  satis- 
fied neither  employers  nor  employed.  Outside  the  field  of  rail- 
road accidents,  the  heavy  burden  of  proof  was  still  on  the  person 
seeking  redress.  The  result  was  an  ever  increasing  number  of 
lawsuits  which  seriously  embittered  relations  between  employers 
and  employed,  and  in  most  cases  frustrated  the  beneficent  pur- 
poses of  the  law.  The  inability  of  irresponsible  employers  to 
pay  the  indemnity  often  compelled  the  applicant  to  apply  for 
public  or  private  charity.  More  serious  still,  was  the  absence  of 
compensation  for  the  vast  number  of  injuries  caused  by  the 
inevitable  risks  involved  in  modern  industry.  This  unsatisfac- 
tory situation  led  to  the  compulsory  insurance  laws  which  will  be 
referred  to  in  subsequent  pages  in  the  order  of  their  enactment. 

The  plan  of  obligatory  insurance  appears  to  have  originated 
with  the  Socialists.  Led  by  Dr.  Schaeffle,  a  growing  party  had 
for  years  urged  the  establishment  of  such  insurance  by  legis- 
lation. Fortunately  many  distinguished  economists  as  well  as 
the  great  body  of  the  people  fell  in  with  the  idea.  Socialism  was 
growing  apace.  From  only  125,000  adherents  in  1872,  it  had  in- 
creased its  numbers  to  nearly  half  a  million  five  years  later. 
Repressive  legislation  could  not  check  the  growth  of  discontent  ; 
and  Bismarck,  although  at  first  not  inclined  to  an  obligatory  sys- 
tem, later  adopted  the  suggestion  of  his  political  antagonists. 

In  advocating  it,  he  said  that  workingmen  must  be  led  by 
visible  statutory  advantages  to  consider  the  state,  not  only  as  an 
institution  for  the  protection  of  the  wealthier  classes,  but  as 
caring  for  their  interests  as  well.  The  fear  that  socialism 
would  thus  be  introduced  into  legislation,  should  not  be  allowed 
to  hinder  the  adoption  of  the  plan.  The  entire  undertaking 
was  nothing  new;  it  was  only  a  modern  political  development 
based  on  practical  Christianity. 

Accordingly  the  first  compulsory  insurance  measure  was 
presented  by  Bismarck  to  the  Reichstag  early  in  1881.  This  was 
an  entering  wedge  and  was  limited  to  accident  insurance.  It 
provided  that  all  proprietors  of  mines,  factories,  etc.,  be  required 
to  insure  their  workmen  and  other  employes  against  occupa- 
tional accidents,  either  in  an  imperial  insurance  department  or  in 
mutual  associations  of  employers.  Private  companies  were  ex- 

93 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

eluded.  Both  employers  and  employes  were  to  contribute  and  a 
subsidy  was  to  be  paid  out  of  imperial  funds.  The  Reichstag 
assented  to  the  principle  of  obligatory  insurance  but  refused  to 
vote  financial  support;  it  also  desired  to  substitute  separate 
departments  for  the  kingdoms,  respectively,  instead  of  having 
one  imperial  department.  These  amendments  were  rejected  by 
the  government  and  matters  were  for  a  while  at  a  standstill. 

The  good  offices  of  Emperor  William  were  then  invoked, 
and  his  famous  message  to  the  Reichstag  of  November  17,  1881, 
made  his  position  unmistakably  clear.  If  there  had  been  pre- 
vious doubt  as  to  his  attitude,  none  could  now  exist;  he  was 
obviously  heart  and  soul  in  sympathy  with  the  program  of  his 
chancellor.  He  said  in  part: 

"We  consider  it  Our  Imperial  duty  to  impress  upon  the 
Reichstag  the  necessity  of  furthering  the  welfare  of  the  working 
people,  we  should  review  with  increased  satisfaction  the  mani- 
fold successes  with  which  The  Lord  has  blessed  Our  reign,  could 
We  carry  with  Us  to  the  grave  the  consciousness  of  leaving  Our 
country  an  additional  and  lasting  assurance  of  internal  peace, 
and  the  conviction  that  We  have  rendered  the  needy  that  assist- 
ance to  which  they  are  justly  entitled.  Our  efforts  in  this  direc- 
tion are  certain  of  the  approval  of  all  the  Federate  Governments, 
and  We  confidently  rely  on  the  support  of  the  Reichstag,  with- 
out distinction  of  parties.  In  order  to  realize  these  views,  a 
Bill  for  the  Insurance  of  Workmen  against  Industrial  Accidents 
will  first  of  all  be  laid  before  you;  after  which  a  supplementary 
measure  will  be  submitted,  providing  for  a  general  organization 
of  industrial  Sick  Relief  Insurance.  Likewise,  those  who  are 
disabled  in  consequence  of  Old  Age  or  Invalidity  possess  a  well- 
founded  claim  to  more  ample  relief  on  the  part  of  the  State  than 
they  have  hitherto  enjoyed.  To  devise  the  fittest  ways  and 
means  for  making  such  provision,  however  difficult,  is  one  of  the 
highest  obligations  of  every  community,  based  on  the  moral 
principles  of  Christianity.  A  more  intimate  acquaintance  with 
the  actual  capabilities  of  the  people,  and  a  mode  of  turning  these 
to  account  in  corporate  associations,  under  the  patronage  and 
with  the  aid  of  the  State,  will,  We  trust,  develop  a  scheme  to  solve 
which  the  State  alone  would  prove  unequal." 

As  a  result,  a  plan  was  accepted  which  required  employers  to 
insure  their  employes  against  consequences  of  industrial  accidents, 

94 


GERMANY 

insurance  to  be  taken  in  mutual  associations  of  employers,  com- 
posed of  all  engaged  in  the  same  branch  of  trade.  The  first 
measure  was  enacted  July  6,  1884,  and  became  effective  October 
i,  1885.  It  was  restricted  to  the  more  hazardous  industries  such 
as  mines,  quarries,  excavations,  factories  and  certain  branches 
of  the  building  trades.  In  the  course  of  a  few  years  the  original 
law  was  followed  by  a  series  of  supplementary  measures  extend- 
ing its  benefits  to  additional  fields.  Thus  the  statute  of  May  28, 

1885,  included  workmen  engaged  in   inland  transportation  by 
land  and  water,  as  well  as  employes  in  the  post  office  and  tele- 
graph departments,  and  in  the  army  and  navy.     That  of  May  5, 

1886,  included  wage-earners  in  agriculture  and  forestry;   and  the 
laws  of  July  u  and  13,   1887,  respectively,  those  engaged  in  con- 
struction and  navigation. 

In  spite  of  earnest  effort  to  attain  simplification,  it  was 
found  impossible  to  combine  these  measures  into  one  general 
accident  act.  As  revised  in  1900,  the  laws  consist  of  a  main  sec- 
tion which  gives  certain  rules  for  organization,  and  a  series  of 
separate  measures  covering  (i)  industrial  enterprises,  (2)  agri- 
culture and  forestry,  (3)  building  and  (4)  navigation.  Since 
then,  special  laws  have  been  passed  for  insurance  of  prisoners 
against  accident  (June  30,  1900)  as  well  as  of  public  officials  and 
soldiers  (June  18,  1901). 

Compulsory  accident  insurance  at  the  present  time,  there- 
fore, covers  all  workingmen,  irrespective  of  wages,  and  all  inferior 
managing  officials  whose  salaries  do  not  exceed  3000  marks  ($750) 
per  annum.  Superior  managing  officials  and  all  employers  are 
exempt.  The  right  was  reserved,  however,  to  extend  this  system 
by  decree,  (i)  to  employers  whose  yearly  earnings  do  not  exceed 
3000  marks  or  who  employ  only  two  regular  workmen,  (2)  to 
persons  engaged  in  home  industries,  irrespective  of  the  number  of 
their  workmen,  and  (3)  to  superior  managing  officials  with  sala- 
ries above  3000  marks.  In  any  case,  persons  of  these  classes  are 
entitled  to  insure  voluntarily,  a  privilege  which  may  also  be 
extended  by  decree  to  employers  whose  yearly  incomes  are  more 
than  3000  marks. 

The  responsibility  of  administering  and  enforcing  the  law 
was  placed  almost  entirely  in  the  hands  of  employers.  To  obtain 

95 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

the  most  reliable  average  of  risk,  as  well  as  convenience,  economy 
and  efficiency  of  administration  and  control,  employers  of  the 
same  or  allied  industries  must  unite  in  mutual  associations 
(Berufsgenossenschaften)  to  insure  their  workmen  against  occu- 
pational accidents.  As  soon  as  an  employer  establishes  his 
factory  or  other  work,  he  becomes  ipso  facto  a  member  of  the 
mutual  association  of  his  trade  and  district.  In  most  cases,  the 
associations  cover  all  engaged  in  the  industry  throughout  the 
empire  or  at  least  the  kingdom.  When  the  association  is  co- 
extensive with  the  empire,  the  administration  is  simplified  by 
forming  sections,  one  for  each  kingdom,  under  the  management 
of  superintendents  (Vetrauensmannern). 

Agricultural  laborers,  by  special  statute,  are  insured  in 
agricultural  associations  of  employers  formed  for  that  purpose. 
Employes  of  the  state  are  insured  by  the  state  by  means  of  funds 
administered  by  official  boards  (Ausfiihrungsbehorden). 

All  of  these  organizations  are  self-governing  bodies,  man- 
aged by  the  contributing  employers,  but  over  which  the  imperial 
government  exercises  control  and  supervision.  Each  association 
determines  for  itself  the  danger  class  to  which  each  of  the  con- 
tributory establishments  belongs,  and  is  authorized  to  levy  a  pre- 
mium according  to  hazard.  It  is  also  empowered  to  enforce  rules 
and  regulations,  to  require  the  use  of  safety  devices  and  appli- 
ances, and  to  report  for  legal  action  any  employer  who  refuses 
to  insure,  fails  to  pay  his  premiums,  or  declines  to  comply  with 
proper  requirements.  In  case  of  accident,  the  mutual  association 
of  employers  pays  the  compensation.  Every  accidental  injury  or 
deatfi,  except  those  caused  by  the  wilful  act  of  the  employe  him- 
self, is  indemnified. 

The  following  scale  of  compensation  is  fixed  by  statute: 
In  case  of  accidental  injury  during  the  employment:  (i)  free 
medical  attendance,  medicines,  and  necessary  appliances,  such  as 
crutches,  etc. ;  (2)  a  cash  benefit  during  disablement,  which  for 
total  disability  is  two-thirds  of  the  wages  and  for  partial  incapacity 
is  two-thirds  of  the  impairment  of  the  earning  power;  (3)  or,  in 
lieu  of  the  cash  benefit,  free  hospital  treatment  until  cured  and  a 
reduced  cash  benefit  for  dependents.  In  case  of  total  disability, 
the  amount  of  cash  benefit  may  be  increased  even  to  the  full 

96 


GERMANY 

wages  and,  in  event  of  involuntary  and  undeserved  non-employ- 
ment, due  to  partial  incapacity,  the  partial  cash  benefit  may  be 
raised  to  the  full  allowance,  namely,  two-thirds  of  the  wages. 
For  accidental  death,  compensation  consists  of  (i)  a  burial  benefit 
equal  to  one-fifteenth  of  the  yearly  wages  (but  not  less  than  50 
marks) ;  and  (2)  pensions  to  dependents  during  dependency,  to 
the  widow  during  widowhood  and  to  children  until  fourteen 
years  of  age,  varying  from  20  per  cent  to  an  aggregate  of  not 
more  than  60  per  cent  of  the  yearly  wages. 

The  cost  does  not  fall  entirely  on  the  mutual  associations 
of  employers.  In  justice  to  them,  since  they  also  pay  one-third 
the  cost  of  sickness  insurance,  it  was  arranged  that  the  cash 
benefits  for  a  period  not  to  exceed  13  weeks  be  provided  by  the 
sickness  insurance  societies.  Unlike  the  mutual  associations  of 
employers,  these  societies  when  the  law  was  passed,  were  already 
well  adapted  by  years  of  experience  to  deal  effectively  with  the 
countless  lesser  hurts  incidental  to  modern  industry.  It  is  only 
when  the  accident  leads  to  disability  exceeding  13  weeks,  or  the 
consequences  are  more  serious,  that  the  mutual  associations  of 
employers  bear  the  cost. 

In  case  of  disablement  beyond  13  weeks  or  of  accidental 
death,  the  amount  of  compensation  is  fixed  by  the  mutual  asso- 
ciation to  which  the  employer  belongs.  The  original  adjustment 
is,  therefore,  entirely  in  the  hands  of  the  employers'  associations; 
but  their  decision  is  not  final.  The  injured  workman  or  claim- 
ants for  benefits  because  of  a  workman's  death,  may  if  dissatisfied, 
carry  the  case  within  one  month  to  a  so-called  arbitration  board 
composed  of  five  members, — two  representatives  chosen  by  the 
employers'  association  and  two  by  the  workmen,  with  a  state 
official  as  chairman.  These  arbitration  boards  are  established 
according  to  the  districts  into  which  the  empire  is  divided  under 
the  invalidity  insurance  law,  for  both  the  accident  and  invalidity 
insurance  systems,  and  have  been  working  since  January  i,  1901. 
Previous  to  1900  they  had  jurisdiction  in  invalidity  cases  only. 
The  labor  representatives  are  chosen  by  directors  of  sick  asso- 
ciations. In  the  more  important  cases,  either  party  may  appeal 
against  the  judgment  of  the  arbitration  board  to  the  Imperial 
Insurance  Office  (Reichs-Versicherungsamt).  This  body,  the 

?F  97 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

supreme  administrative  and  judicial  authority  for  the  whole 
insurance  system,  is  composed  of  permanent  members,  including 
its  president,  of  several  superior  state  officials  appointed  for  life 
by  the  emperor,  and  of  temporary  members.  The  latter  include 
six  delegates  of  the  Bundesrath  and  six  representatives  of  em- 
ployers and  employes  in  equal  numbers.  The  employes  thus 
exercise  an  important  part  in  the  administration  of  the  acci- 
dent law. 

The  cost  of  medical  treatment  and  the  burial  benefit,  if 
death  occurs,  having  been  fixed  by  the  association,  must  be  paid 
within  a  week  after  the  accident.  Benefits  are  paid  monthly  in  ad- 
vance, or,  if  the  annual  amount  is  60  marks  ($15)  or  less,  quarterly; 
the  law,  however,  permits  longer  payment  periods  by  agreement, 
and  also  the  remittance  of  lump  sums  in  commutation  of  small 
partial  pensions,  but  not  otherwise.  Actual  payments  are  made 
through  the  post  office  which  also  advances  what  is  needed  out 
of  its  banking  department.  These  payments  are  refunded  by  the 
mutual  associations  at  the  close  of  the  financial  year. 

Every  employer  contributes  yearly  in  proportion  to  the 
risk  of  his  establishment  and  to  his  payroll,  the  risk  being  deter- 
mined by  means  of  a  classified  tariff  of  rates,  drawn  up  by  his 
association.  As  these  associations  naturally  have  a  strong  interest 
in  diminishing  the  number  of  accidents,  the  law  has  conferred 
on  them  the  important  privilege  of  prescribing  preventive  rules 
and  regulations.  With  the  approval  of  the  Imperial  Insurance 
Office,  these  rules  have  the  force  of  law  and  must  be  complied 
with.  The  mutual  associations  may  send  inspectors  to  any  fac- 
tory or  establishment  at  any  time  to  see  if  the  regulations  are 
obeyed.  In  cases  of  negligence,  the  employer  may  be  fined; 
if  it  continues,  he  may  be  given  a  rate  for  a  higher  risk  and,  in 
case  of  flagrant  neglect,  the  state  may  step  in  and  close  the 
factory.  Workingmen  are  also  subject  to  these  regulations  and 
may  be  fined  up  to  as  high  as  six  marks  (11.50)  for  each  failure 
to  obey. 

Turning  to  the  operation  of  the  agricultural  accident  insur- 
ance law,  we  find  certain  important  deviations.  It  allows  the  ex- 
tension of  compulsory  insurance  to  all  employing  farmers  and 
foresters  and  to  their  domestic  servants.  This  is  desirable  since 

98 


GERMANY 

in  Germany  most  of  the  farms  are  very  small  and  the  owners  are 
working  farmers.  Mutual  associations  of  farmers  and  foresters 
are  organized  by  territorial  districts  which  usually  coincide  with 
those  of  the  communal  or  state  administrations.  The  adminis- 
tration may  therefore  be  entrusted,  by  agreement  or  by  local 
statute,  to  the  political  administrative  authorities,  such  as  county 
councils  or  kingdom  parliaments  or  to  local  magistrates.  The 
basis  for  determining  benefits  is  not  actual  earnings,  as  among 
employes  in  other  industries,  but  the  average  rate  of  wages  for 
agricultural  laborers,  the  amount  of  which  is  ascertained  by  the 
higher  administrative  authorities.  Only  managing  farmers  or 
foresters  and  skilled  workmen  are  indemnified  according  to  actual 
wages,  as  in  other  industries.  During  the  first  13  weeks  of 
injury,  local  authorities  are  required  to  make  the  preliminary 
provision  which  in  other  industries  is  made  by  sickness  insur- 
ance societies.  This  includes  medical  attendance  and  medicines 
for  the  injured  in  all  cases  where  a  provision  equal  to  that  guar- 
anteed by  the  imperial  sickness  insurance  law  has  not  been 
introduced  by  the  kingdom  or  the  commune.  Contributions  of 
members  are  levied,  not  according  to  the  classification  of  a  table 
of  rates  and  the  number  of  hands  employed,  but  on  the  same 
basis  as  other  taxes. 

The  Building  Trades  Accident  Insurance  Law  embraces  all 
the  branches  of  building  employments  not  covered  by  the  above- 
mentioned  laws.  In  particular,  it  applies  to  underground  con- 
struction, such  as  sewers,  subways  or  tunnels.  For  such  con- 
struction there  is  a  single  mutual  association  (Tiefbau-Berufsgenos- 
senschaft)  embracing  the  whole  empire,  and  its  operations  are 
strictly  regulated  by  law. 

The  Marine  Insurance  Law  embraces  ocean  navigation  as 
well  as  sea  fisheries.  While  such  insurance  for  the  large  enter- 
prises is  effected  as  previously  by  the  Marine  Mutual  Association 
(See-Berufsgenossenschaft),  a  special  association  has  been  organ- 
ized to  provide  for  the  recently  established  insurance  of  small 
enterprises,  small  sea-going  and  fishing  craft.  Unlike  the  In- 
dustrial Accident  Insurance  Law,  the  application  of  this  insurance 
is  not  limited  to  persons  with  certain  maximum  income,  but  may  be 
extended  to  those  whose  incomes  exceed  3000  marks  ($750).  The 

99 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

yearly  earnings  of  sailors  and  fishermen  are  determined,  not  on 
the  basis  of  the  individual  wage,  but  as  for  farmers  and  foresters, 
on  average  rates  of  wages  ascertained  by  the  imperial  chancellor 
for  the  whole  coast  by  classes.  During  the  first  13  weeks  of 
disability  by  accident,  the  provisions  of  the  commercial  code  for 
skippers  and  of  the  seamen's  code  for  sailors  remain  in  force, 
these  rules  imposing  the  care,  support  and  medical  treatment 
of  the  sick  and  injured  upon  the  shipowner.  In  all  other  respects, 
the  same  rules  obtain  as  in  industrial  accident  insurance. 

At  the  present  time,  compulsory  accident  insurance  does 
not  cover  the  fields  of  self-employed  craftsmen,  small  trades, 
household  service  and  commercial  salesmen,  which  embrace 
about  2,000,000  additional  working  people.  Extensions  are,  how- 
ever, contemplated.  Yet,  in  spite  of  this  limitation,  there  can  be 
no  question  of  the  beneficent  results  of  the  legislation.  It  has 
made  itself  felt  in  the  affairs  of  the  nation,  not  only  by  compen- 
sating the  most  helpless  members  of  society  for  injuries,  and  pre- 
venting accidents,  but  also  by  developing  a  strong  spirit  of  co- 
operation among  employers.  Through  the  agency  of  the  mutual 
associations,  they  now  come  together  to  study  and  discuss  problems 
of  mutual,  general,  and  even  public  interest,  and  it  is  probable 
that  the  remarkable  advance  made  by  German  industry  and  com- 
merce during  the  last  two  decades  is  in  large  part  attributable 
to  this  cause. 

The  wide  scope  of  this  branch  of  workingmen's  insurance 
is  evident  from  the  fact  that  at  the  close  of  1907  more  than 
21,000,000  working  people,  employed  in  nearly  5,500,000  sep- 
arate establishments,  were  directly  insured  under  the  provisions 
of  the  law.  Table  15  shows  the  development  of  the  system 
in  numbers  insured,  from  its  establishment  in  1885  to  the  close 
of  1907. 

The  66  mutual  associations  of  industrial  employers  are  dis- 
tributed among  the  several  branches  of  industry  as  follows: 
building  trades,  14;  textiles,  8;  iron  and  steel,  8;  manufacture 
of  foods  and  beverages,  7;  manufactures  of  and  from  wood,  4; 
land  transportation,  4;  water  transportation,  4;  earthenware 
including  potteries,  3;  brick  works,  3;  glass  works,  3;  paper 
manufactures,  2;  metals  (fine  and  ordinary),  2;  mining,  2;  and 

100 


GERMANY 


one    each    for    mechanical,    chemical,  gas  works,  water  works, 
printing,  leather,  clothing,  musical  instruments,  and  machinery. 

TABLE     15. — NUMBER    OF    ASSOCIATIONS,    ESTABLISHMENTS,    STATE 
EXECUTIVE  BOARDS,  AND  PERSONS  INSURED  AGAINST  ACCIDENT, 

1885-1907 


INDUSTRIAL,  B'LD'G, 

AGRICULTURE  AND 

STATE 

AND  MARINE  TRADE 

FORESTRY  TRADE 

EXECUTIVE 

ASSOCIATIONS 

ASSOCIATIONS 

BOARDS 

Total] 

Year 

Number  of 

Number  of 

Number  of 

Number 

Insured 

«*> 

i-i 

Estab- 
i~,i. 

Persons 

c-l 

A  s 
|J 

Estab- 

K,  A 

Persons 

| 

Persons 

r?  "« 

Itsh- 

Insured 

^•l 

113  D- 

Insured 

cs 

Insured 

N  •  ** 

u 

ments 

ments 

93 

1885 

57 

194,601 

2,986,248 

83 

265,088 

3,251  ,336 

1890 

64 

390,622 

4,987,206 

48 

4,843,621 

8,088,698 

316 

604,380 

13,680,284 

1895 

64 

435-  "37 

5,409,218 

48 

4,8i3,572 

12,289,415 

393 

690,835 

18,389,468 

1900 

65 

478,752 

6,928,894 

48 

4>7">°77 

1  1,189,071 

425 

774,926 

18,892,891 

1905 
1906 

66 
66 

637,61  1 
659,935 

8,195,732 
8,725,500 

48 
48 

4,658,826 
4,695,789 

1  1,189,071 
1  1,189,071 

516 
527 

857,709 
912,642 

20,242,512 
20,727,213 

1907 

66 

637,118 

9,018,367 

48 

4,710,401 

1  1,189,071 

535 

964,589 

21,172,027 

The  small  number  insured  for  the  year  1885  is  clearly  due 
to  the  small  number  of  employments  to  which  the  law  at 
first  applied.  By  the  year  1890,  mutual  associations  of  farmers 
and  foresters  were  added,  with  nearly  5,000,000  separate  em- 
ployers, a  number  larger  than  the  influx  at  any  time  in  the 
seventeen  years  following.  The  majority  of  these  were  small 
farmers  who  protect  themselves  and  their  families,  as  well  as 
their  employes,  by  means  of  this  insurance.  The  law,  there- 
fore, benefits  not  workmen  merely,  but  also  large  numbers  of 
small  proprietors,  who  are  thus  protected  against  injuries  to 
themselves  or  members  of  their  families  that  might  result  in 
serious  hardships  or  even  compel  them  to  resort  to  charity. 

The  number  of  mutual  associations  of  industrial,  and  of 
agricultural  and  forestry  employers,  taken  together,  has  remained 
about  stationary  during  the  past  two  decades;  only  in  the  number 
of  insured  workingmen  is  a  large  increase  to  be  observed.  To  deal 
conveniently,  economically  and  efficiently  with  such  large  num- 
bers, the  1 14  mutual  associations  were,  at  the  close  of  1907,  sub- 

101 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

.  divided  into  939  sections,  in  charge  of  28,066  superintendents  and 
4133  other  administrative  officers. 

The  government  statistics  of  accidents  give  an  instructive 
body  of  data  relative  to  the  dangers  involved  in  the  various  fields 
of  modern  industry.  All  trades  are  included  and  the  facts 
analyzed  with  great  accuracy  for  each  year  since  the  law  went 
into  operation.  Accidents  are  classified  under  four  heads,  accord- 
ing to  the  result:  (i)  fatal,  (2)  totally  and  permanently  disabling, 
(3)  partially  and  permanently  disabling,  (4)  temporarily  disabling. 
Table  1 6  gives  the  total  number  of  accidents  as  well  as  the  rate 
per  looo  insured  for  the  last  two  decades. 

The  remarkable  disparity  between  the  number  reported  as 
injured  and  the  number  receiving  compensation  will  at  once  be 
noted.  In  the  year  1907,  the  two  totals  were  respectively  662,90 1 
and  144,703.  In  explanation,  it  must  be  recalled  that  most  of 
the  accidents  reported  do  not  involve  disability  beyond  the  13 
weeks  covered  by  sickness  insurance.  Such  are  compensated 
by  the  latter  system  and  make  no  claim  against  employers'  asso- 
ciations. The  144,703  cases  are  of  disability  beyond  the  period 
of  13  weeks. 

Notwithstanding  great  improvements  in  safety  appliances 
and  other  means  of  prevention,  the  number  of  accidents  with 
the  single  exception  of  those  resulting  in  complete  permanent 
disablement,  has  increased  rapidly  per  1000  insured.  The 
average  duration  of  disability  has  also  increased,  doubtless 
partly  due  to  the  broadening  of  the  statutes.  The  same  condition 
has  been  observed  in  all  other  countries  where  liability  laws  have 
been  liberalized.  The  increase  is  also  ascribed  to  simulation  and 
to  malingering,  as  it  is  certain  that  some  workmen  take  advan- 
tage of  the  slightest  accident  to  claim  compensation.  But  the 
chief  cause  of  increase  in  the  number  of  accidents  in  Germany 
is  unquestionably  the  greater  complication  of  industry,  the  greater 
hazard  necessarily  resulting  therefrom  and  intensity  of  pressure 
upon  workingmen.  With  the  strong  tendency  to  migrate  from 
the  country  to  industrial  cities,  thousands  of  men  enter  factories 
who  are  not  by  training  prepared  for  the  complex  machinery 
they  must  handle.  These  factors  augment  the  number  and  the 
seriousness  of  accidents. 

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I03 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 


In  general,  accidents  increase  in  number  as  workmen 
become  older.  Thus,  in  the  industrial,  building  and  marine 
associations  of  employers,  the  rate  per  annum  was  3.6  per  1000 
insured  for  those  between  the  ages  of  eighteen  and  twenty,  5.4 
for  those  between  twenty  and  thirty  years,  9.2  for  those  between 
thirty  and  forty,  12.3  for  those  between  forty  and  fifty  and  13.8 
for  those  between  fifty  and  sixty  years.  More  accidents  occur  in 
the  summer  months  when  the  activity  in  certain  occupations  is 
greatest  and  when  more  men  are  at  work;  and  Monday  and 
Saturday  are  accountable  for  a  heavier  toll  than  the  remaining 
week  days.  The  large  number  of  accidents  occurring  on  Satur- 
days is  doubtless  caused  by  the  strain  of  the  week's  work,  while 
those  of  Monday  are  very  likely  the  result  of  Sunday  jollification. 
Table  17  shows  the  conditions  prevailing  in  the  industrial  mutual 
associations  alone. 

TABLE    17. — NUMBER  OF  ACCIDENTS,    AND  NUMBER    PER    IOOO  PER- 
SONS   INSURED   IN    INDUSTRIAL    MUTUAL   ASSOCIATIONS, 
1888-1907 


NUMBER  OF  ACCIDENTS 

PER  looo  INSURED 

Permanent 

Permanent 

Year 

inJUry             Tern- 

injury 

Tem- 
po- 

Total 

Fatal 

porary 

Total 

Fatal 

rary 

Com- 
plete 

Partial 

injury 

Com- 
plete 

Par- 
tial 

» 

in- 
jury 

1888 

18,809 

2,943 

1,886 

10,270 

3.710     4.35 

0.68 

0.43 

2.38 

0.86 

1890 

26,403 

3-597 

1,869 

16,109       4,828     5.29  1  0.72     0.37     3.23 

0.97 

1895 

33.728 

3.644 

780 

19,312       9,992     6.24     0.67  :  0.15     3.57      1.85 

1900 

5'.097 

5,108 

592 

24,790     21,207     7-46 

0.74     0.08     3.58     3.06 

1905 

68,360 

5.'54 

572 

29,423  j  33.211 

8.34     0.63  ;  0.07     3.59     4.05 

1900 

71,227 

5.398 

578 

30,134     35,117     8.26  j  0.63     0.07 

349 

4.07 

1907 

75.370 

6,078 

57' 

30,280     38,441      8.36 

0.68     0.06 

3.36 

4.26 

The  four  classes  of  accidents,  taken  together,  have  almost 
doubled  in  frequency  in  the  last  twenty  years,  while  those  result- 
ing in  temporary  injuries  only,  but  exceeding  13  weeks  in  dura- 
tion, have  increased  five-fold  in  the  same  period.  The  one 
striking  exception  is  the  constant  reduction  in  the  number  of 

104 


GERMANY 


completely  disabled  and  killed.  This  is  very  likely  due  to  the 
care  which  the  mutual  associations  of  employers  exercise  in 
dealing  with  cases  of  serious  injury. 

The  results  vary  in  the  different  trades.  Table  18  gives 
the  ratio  of  accidents  per  1000  full-time  workers  in  22  classes  of 
occupations. 

TABLE    1 8. — RATIO    OF    ACCIDENTS    PER    IOOO    FULL-TIME    WORKERS 
IN    22  CLASSES    OF    OCCUPATIONS,    1906-1907 


Class  of  Industry 

1906 

1907 

i.  Mining          

15.70 

'5-54 

2.  Quarries       

.4.98 

'5-35 

3.  Glass,  pottery,  brick-making  

6.62 

6.98 

4.  Iron  and  steel      

n.  23' 

1  1.29 

5.  Metal,  mechanical  and  musical  instruments  . 

6.77 

7.10 

6.  Chemical      

9.24 

9.48 

7.  Gas  and  water  works        

6.23 

6.45 

8.  Textile  industry         

3.07 

3.00 

9.  Paper  and  book  printing           

4.80 

4-79 

10.  Leather  and  clothing  

3-73 

3.84 

1  1  .  Wood    

13.19 

13.28 

12.  Food  stuffs,  provisions  and  tobacco       .... 

•?•••» 

4.60 

J, 
4.76 

13.  Milling,  sugar,  distilling,  dairy,  brewing  and  malting 

1  1.50 

12.  IO 

14.   Building  (private)      .        .                       .... 

I  I.OO 

11.44 

15.  Railway  (private)       .        .                       .... 

7.20 

6.55 

16.  Storage  and  carting  .        .                       .... 

15.06 

14.60 

17.  Inland  waterways      .                               .... 

14.  1  1 

13.26 

18.  Marine  shipping  (private)                         .... 

6.70 

6.22 

19.  Marine  and  army        .        .                       .... 

4.41 

4.46 

20.  Public  constructions  for  state,  province  and  commune 

7-25 

7.63 

21.  State  railways,  post  and  telegraph         .... 

7.42 

6.92 

22.  State  rfavigation,  dredging  and  rafting  .... 

1  1.50 

I  I.I  I 

Average  for  industries,  building  and  navigation  accident  in- 

surance associations,  omitting  contracting,  excavating 

and  marine  associations   

9.31 

9-37 

Apart  from  mining  and  quarrying,  the  most  dangerous  occu- 
pation is  that  of  storage  and  carting.  It  is  surprising  to  note 
in  the  above  table  the  low  rate  of  casualties  upon  railways  as 
compared  with  the  figures  for  the  United  States. 

The  causes  of  accidents  are  difficult  to  classify,  but  they  may 
be  roughly  grouped  under  16  heads.  Table  19  gives  the  causes 
of  accidents  for  which  compensation  was  first  paid  during  1907. 

105 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 


TABLE     19. — CAUSES    OF     ACCIDENTS     IN     INDUSTRIAL,     BUILDING, 
MARINE   AND  TRADE   ASSOCIATIONS  FOR    WHICH  COMPENSA- 
TION WAS   FIRST   PAID    IN    1907 


Causes 

Non- 
fatal 
Injuries 

PerCent 
of  Total 

Fatal 
Injuries 

Per  Cent 
of  Total 

Steam,  engine  and  other  motors 

535 

0.67 

44 

0.70 

Transmission  machinery      .... 

969 

1.  21 

156 

2.47 

Work  machines,  excluding  derricks    . 

13.916 

17.36 

176 

2.78 

Derricks  and  hoisting  machines  . 

4,481 

5-59 

546 

8.64 

Steam  vessels,  cooking  apparatus  and  con- 

duits   

138 

0.17 

37 

0.59 

Explosives       

5°5 

0.63 

144 

2.28 

Combustible  materials  (glowing  metals,  gas, 

vapors)        

2,899 

3.62 

574 

9.08 

Cave-ins;  falling  of  various  objects    . 

11,882 

14.82 

1,285 

20.33 

Falling  from  stairs,  ladders,  etc.  . 

9,005 

1  1.24 

752 

11.90 

Loading  and  unloading,  lifting  and  carrying 
Vehicles  (running  over,  etc.) 

11,396 
5-374 

14.22 
6.71 

345 
545 

5-46 
8.62 

Steam  railways  (running  over)    . 

7.274 

9.08 

970 

'5-35 

Shipping  

843 

1.05 

361 

5-7' 

Animals  (push,  blow,  bite,  etc.,  including  all 

accidents  while  riding)     .... 

1,301 

1.62 

90 

1.42 

Hand-work  (hammer,  ax,  etc.)    . 

3,269 

4.08 

43 

0.68 

Various  causes       

6,357 

7-93 

252 

3-99 

Total   

80,144 

100 

6,320 

100 

Turning  to  agriculture  and  forestry,  we  find  the  following 
conditions  with  reference  to  accidents : 

TABLE  2O. — NUMBER  OF  ACCIDENTS  IN  AGRICULTURE  AND  FORESTRY 
AND    RATIO    PER    IOOO    INSURED,   1890-1907 


NUMBER  OF  ACCIDENTS 

PER  1000  INSURED 

Permanent 

Permanent 

injury 

Tem- 

injury 

Tem- 

Year 

Total 

Fatal 

porary 

Total 

Fatal 

porary 

Com- 

Partial 

Injury 

Com- 

Par- 

Injury 

plete 

plete 

tial 

1890 

'2.573 

',877 

438 

5.404 

4,854 

'•55 

0.23 

0.05 

0.67 

0.60 

1895 

37,383 

2,2.3 

57' 

19.529 

15.070 

3.04 

0.18 

0.04 

1.59 

1.23 

1900 

50,311 

2,662 

I11 

24,181 

22,957 

4.50 

0.24 

0.05 

2.16 

2.05 

1905 

66,335 

2,907 

610 

32,009 

30,809 

5-93 

0.26 

0.00 

2.86 

2-75 

1906 

61,887 

2,872 

593 

28,580 

29,842 

5-53 

0.26 

0.05 

2-55 

2.67 

1907 

62,673 

2,843 

507 

27,049 

32,274 

5.60 

0.25 

0.05 

2.42 

2.88 

1 06 


GERMANY 

The  rate  of  accidents  per  1000  insured  is  smaller  in  agricul- 
ture than  in  the  industries.  This  is  true  of  each  of  the  four 
classes  of  injuries,  but  especially  in  that  of  fatal  injuries.  It 
would  appear  from  the  statistics  of  the  last  three  years,  1905, 
1906  and  1907,  that  an  equilibrium  has  been  reached  in  the 
number  of  accidents  and  that  a  tendency  toward  a  decrease  per 
looo  insured  is  now  evident. 

The  compensation  paid  to  injured  workmen  has  already 
been  discussed.  Table  21  shows  the  total  amounts  expended 
under  the  various  items. 


TABLE  21. — DISBURSEMENTS  CLASSIFIED  BY  KIND  OF  EXPENDITURE, 

1885-1907 


Total  Com- 

Com- 

pensation 

pensa- 

Including 

tion 

..   ,.    ; 

Pensions 

Year 

Total  Dis- 
bursements 

Medicines, 
Pensions, 

during 
the 

tv'l  CulCdl 

Treat- 

Disability 
Benefits 

Death 
Benefits 

to  Depend- 
ents of 

etc.,  paid 

First 

Wlfftl 

Deceased 

after  13 

'3 

weeks 

weeks 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1885 

1,004,264 

20,010 

19 

148 

1  0,967 

8,876 

1890 

26,623,666 

20,315,319 

36,096 

819,054 

13,538,549 

279,842 

4,094,029 

1895 

60,497,963    50,125,782316,355 

1,317.350 

35,306,228 

319,209 

9.585.370 

1900 

100,876,669 

86,649,946701,614 

2,031,236 

63,227,542 

491.459 

I5,750.«ii 

1905 
1906 

'57.539-727i35.437.9337°9,784 
165,964,271  142,436,864724,411 

3,125,276 
3.228,553 

100,559,596 
105,763,748 

637,08323,187,305 
654.347;247  1  7.047 

1907 

175.427.5°°  '  50.325.292 

1 

705,300 

1  1  1,138,900 

733.ooo 

26,513,900 

These  figures  show  a  marked  increase  in  nearly  every  item 
for  each  successive  year.  In  1907  cash  benefits  to  injured  work- 
men absorbed  about  70  per  cent  of  the  total;  pensions  to 
families  of  workmen  killed  by  accident  20  per  cent  more,  and 
the  remaining  10  per  cent  was  expended  for  medical  treatment, 
burial  benefits,  etc. 

Table  22  shows  the  average  amounts  expended  for  benefits 
during  the  first  13  weeks  of  disability,  for  medical  and  hospital 
care,  and  for  pensions  to  dependents,  per  member  treated. 

107 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

TABLE     22. — COMPENSATION    PER    PERSON    INJURED    AND    MEMBER 
TREATED,    1885-1906 


PER  MEMBER  TREATED 

Compensa- 

year 

tion  Per 
Person 
Injured 

Benefits 
during  First 
13  Weeks 

Cost  of 
Medical 
Care 

Cost  of 
Hospital 
Service 

Pensions  to 
Dependents 

(Marks) 

(Marks) 

(Marks') 

(Marks') 

(Marks') 

1885 

74.66 

6.88 

1890 

202.64 

41-37 

1  20.04 

36.74 

1895 

'57-45 

33-5' 

'39-54 

35-84 

IQOO 

145.66 

53-77 

33-49 

141.31 

35-30 

IQ05 

151.68 

62.36 

34-7' 

157.04 

43-5° 

1906 

152.10 

64.96 

35-59 

'55-55 

43.90 

It  is  interesting  to  observe  that  the  cost  of  hospital  service  is 
becoming  an  increasingly  important  item,  reaching  155.55  marks 
per  member  treated  in  the  year  1906.  This  is  indicative  of  the 
policy  of  the  mutual  associations  of  employers  which  endeavor  to 
give  the  best  care  to  workmen  who  have  been  seriously  injured. 
Only  by  means  of  a  rapid  and  thorough  restoration  to  health 
can  the  enormous  expense  of  life-long  indemnities  be  avoided. 

The  operation  of  the  law  has,  on  the  whole,  been  satisfac- 
tory to  the  German  people.  There  has  been  much  improve- 
ment in  the  efficiency  of  workmen,  and  employers  have  indi- 
rectly reaped  returns  for  their  compulsory  outlay.  It  may  be 
true,  as  is  sometimes  claimed,  that  the  law  has  had  some  tend- 
ency to  decrease  the  sense  of  personal  responsibility  on  the 
part  of  workmen  and  to  tempt  them  to  secure  compensation 
for  the  slightest  injury;  but  they,  on  their  part,  have  never 
been  content  with  the  arrangement  that  placed  the  adjust- 
ment of  compensation  in  the  first  instance  in  the  hands  of 
the  employers'  associations.  As  a  result  of  this  dissatisfac- 
tion these  adjustments  are  constantly  challenged.  Appeals 
from  the  awards  of  the  associations  of  employers  as  well  as 
from  those  of  the  arbitration  board  are  only  too  common,  the 
more  so  because  litigation  is  free.  The  figures  in  Table  23 
show  the  number  of  appeals  made  from  the  original  awards  of 
the  employers'  associations  to  the  courts  of  arbitration. 

1 08 


GERMANY 


TABLE     23. — NUMBER,    PER    CENT    AND     DISPOSITION     OF    AWARDS 
APPEALED  TO  COURTS  OF  ARBITRATION,   1886-1907 


DISPUTES  SETTLED  THROUGH  A  COURT  OF 

Awards 

ARBITRATION 

>        , 

Appeal- 

Per 

Year 

slwaras 

Open  to 
Revision 

ed  to  a 
Board  of 
Arbitra- 
tion 

Cent 
Ap- 
pealed 

Total 

In 
Favor  of 
Employ- 
ers' Asso- 

Per 
Cent 

In 
Favor  of 
Work- 

Per 
Cent 

ciations 

men 

1886 

2,446 

1,198 

698 

58.26 

500 

4>-74 

1890 

68,684 

14.879 

21.  ,66 

10,698 

6,891 

64.41 

3,807 

35-59 

1895 

'43-783 

33.553 

23-34 

28,245 

20,370 

72.12 

7,875 

27.88 

1900 

2i7>333 

45'655 

21.  OI 

42,064 

30,949 

73-58 

11,115 

26.42 

1905 

395.563 

68,742 

.7.38 

72,613 

56,068 

77-21 

16,545 

22.79 

1906 

406,097 

70.542 

17-37 

79,825 

61,673 

77.26 

18,152 

22.74 

1907 

417.957 

70,957 

16.98 

8i,377 

62,782 

77-  '5 

18,595 

22.85 

Many  decisions  of  the  court  of  arbitration  are  carried  to 
the  still  higher  court  of  the  Imperial  Insurance  Office.  The 
following  table  shows  the  operations  of  the  imperial  office  in 
this  regard. 

TABLE    24. — NUMBER,    PER   CENT    AND    DISPOSITION    OF    APPEALS 

FROM  COURTS  OF  ARBITRATION  TO  THE  IMPERIAL  INSURANCE 

OFFICE,    1886-1907 


DECISIONS 

DISPUTES  SETTLED 

Year 

Decisions 
of  Court  of 
Arbitration 

APPEALED  BY 

Per 
Cent 

Per  Cent 
of  Orig- 
inal De- 

Open to 
Appeal 

Work- 
men 

Em- 
ployers 

Ap- 
pealed 

By  Trial 

Out  of 
Court 

Total 

cisions 
Con- 
firmed 

1886 

1,075 

,78 

89 

24.84 

70 

28 

98 

72.9 

1890 

10,090 

i,  86  1 

493 

23-33 

1,748 

3'8 

2,066 

73-7 

.895 

27.334 

6,371 

'-435 

28.56 

7>35' 

1,002 

8,353 

73-9 

1900 

41,416 

8,600 

2,448 

26.68 

10,254 

1,144 

n,398 

69-9 

1905 

62,420 

13,604 

3,818 

27.91 

15.425 

1,991 

17,416 

71.8 

1906 

68,350 

15,212 

4,422 

28.73 

15,990 

2.37' 

18,361 

73-9 

1907 

70,035 

14,624 

4,980 

27.99 

1  6,  1  1  1 

2,304 

18,415 

72.2 

It  thus  appears  that  of  the  original  awards  of  1907,  70,957, 
or  17  per  cent,  were  carried  to  one  of  the  courts  of  arbitration  for 
revision,  and  that  19,604,  or  28  per  cent,  of  the  judgments  by 

109 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

these  courts  open  to  revision,  or  nearly  5  percent  of  all  the  awards, 
were  carried  to  the  Imperial  Insurance  Office  for  final  consider- 
ation. This  situation  is  certainly  to  be  deplored  since  one  of  the 
objects  of  such  legislation  is  to  reduce  litigation.  The  expense, 
however,  is  not  heavy,  fees  being  strictly  limited  by  law.  It  is 
urged  on  behalf  of  the  workingmen  that  this  be  remedied  by  pro- 
viding boards  of  award,  consisting  of  one  workingman,  one  em- 
ployer and  an  impartial  referee,  which  would  adjust  the  claims  at 
the  outset,  instead  of  a  committee  composed  of  employers  only; 
appeals  to  be  permitted  to  a  higher  court  whose  decisions  will  be 
final  except  on  questions  of  legal  construction  which  may  be 
referred  by  that  court  to  the  imperial  office.  Such  an  arrange- 
ment would  take  much  of  the  work  off  the  imperial  office  and 
should  materially  reduce  the  cost  of  litigation  which  has  by  reason 
of  its  volume  grown  to  be  very  high.  The  plan  has  been  opposed 
by  many  of  the  employers. 

Large  as  the  number  of  accidents  is,  there  can  be  little 
doubt  that  their  number  would  have  been  much  greater,  were  it 
not  for  the  extensive  campaign  to  secure  prevention  and  the 
adoption  of  safety  devices.  All  the  agencies  put  into  operation 
by  the  imperial  insurance  laws  have  worked  together  to  this  end. 
Not  only  the  mutual  associations  of  employers,  but  sickness 
insurance  societies,  managers  of  the  invalidity  funds  and  all  the 
forces  of  the  Imperial  Insurance  Office  are  constantly  engaged  in 
inculcating  and  enforcing  the  need  of  safety  devices  of  all  sorts  and 
making  regulations  to  reduce  the  probability  of  accident.  This 
is  the  more  important  since  the  greater  number  of  accidents  is 
still  due  to  the  negligence  of  either  the  employer,  the  employe, 
or  of  both  together. 

At  present,  preventive  regulations  have  been  adopted 
and  enforced  by  65  out  of  66  industrial  mutual  associations  of 
employers  and  by  41  out  of  the  48  agricultural  associations. 
Good  work  is  being  done;  but  there  is  room  for  improvement. 
Association  inspectors,  as  a  rule,  are  men  who  have  academic 
training  only  and  are  neither  fully  acquainted  with  the  needs 
of  workmen  nor  of  much  practical  experience.  Their  efforts  are 
largely  directed  toward  preventing  accidents  in  the  interest  of 
employers  in  order  to  reduce  the  cost  to  them.  Social  Demo- 

1 10 


GERMANY 


crats  maintain  that  inspectors  should  be  men  who  know  how  to 
advise  employes  as  to  right  methods  of  living  and  who  would 
suggest  means  of  safeguarding  the  workers,  not  only  against 
accident,  but  against  disease  as  well.  There  should,  in  other 
words,  be  greater  co-operation  between  employer  and  employe. 
Better  work  in  many  respects  is  done  in  sickness  insurance 
societies. 

This  work  of  prevention  and  inspection  adds  to  the  already 
large  expense  of  management  of  the  mutual  associations.  Yet 
they  are,  without  exception,  conducted  with  great  economy  and 
effectiveness  as  compared  with  private  companies  engaged  in 
the  same  business  in  other  countries.  The  following  table  gives 
various  items  of  management  expense. 

TABLE    25. — ITEMS   OF   MANAGEMENT   EXPENSE  OF  MUTUAL  ASSO- 
CIATIONS   OF  EMPLOYERS,    1885-1907 


For  Inves- 

Year 

For  Pre- 
vention of 
Accidents 

For 
Inspection 

tigation 
and  Deter- 
mination 
of  Com- 

For Arbi- 
tration 

For  Other 

Manage- 
ment Ex- 
penses 

Total 

Management 
Expenses 

pensation 

(Marks) 

(Marks) 

(Marks') 

(Marks') 

(Marks) 

(Marks) 

1885 

3,230 

3,195 

2.325 

7.569 

971,130 

984,254 

1890 

332,311 

3  '2,347 

676,981 

39',375 

4,871,583 

6,272,250 

,895 

462,005 

453.051 

'.705,587 

796,5'8 

7,091,716      10,055,826 

1900 

656,983 

632,228      2,754,363 

1,1  10,987 

9,002,776 

13,525,109 

1905 

'.373-637 

1,251,045      4,460,899 

1,846,358 

13,71  1,1  16 

21,392,010 

1900 

1.573707 

'.393'3'9 

4,662,413 

2,037,799 

14,529,016 

22,802,995 

1907 

1,638,600 

4,996,400 

2,141,900 

15,382,800 

24,159,806 

In  the  decade  1886-1895,  the  average  ratio  of  total  manage- 
ment expenses  to  total  compensation  paid  was  28.49  Per  cent. 
This  ratio  has  steadily  decreased,  and  from  the  above  figures  it 
appears  that  in  1907  it  had  reached  the  low  figure  of  16  per  cent. 
If  cost  of  investigation  and  of  measures  for  prevention  of  acci- 
dents be  eliminated,  the  percentage  is  only  10.2,  a  remarkably 
low  figure. 

To  meet  all  their  disbursements,  the  associations  have  but 
one  source  of  income;  namely,  contributions  of  the  employers 
themselves.  The  associations,  however,  are  not  required  by 

1 1 1 


INSURANCE    AGAINST    INDUSTRIAL    ACCIDENTS 

the  government  to  set  up,  from  the  date  of  the  award,  a  liability 
equal  to  the  "present"  or  "capitalized"  value  of  the  annuities  to 
be  paid  to  injured  workmen.  Provision  is  made  only  for  pay- 
ment of  the  benefits  falling  due  during  the  current  year,  leaving 
the  payment  of  sums  falling  due  in  subsequent  years  to  be  met 
out  of  the  receipts  of  such  years.  Employers,  as  has  been  said, 
prefer  this  arrangement  because  they  can  thus  retain  the  money 
in  their  business,  which  sums  would  otherwise  have  been  col- 
lected by  the  associations  and  accumulated  in  the  capitalized 
values. 

Table  26  gives  the  total  receipts  of  the  mutual  associa- 
tions of  employers  from  1885  to  1907. 

TABLE    26. — RECEIPTS    OF   MUTUAL    ASSOCIATIONS   OF   EMPLOYERS, 

1885-1907 


Year 

Total  Income 

Contributions  of 
Employers 

From  Interest  and 
Other  Sources 

(Marks) 

(Marks) 

(Marks] 

1885 

1,004,264 

986,391 

'7.873 

1890 

42,527,578 

38,797.294 

3,730,284 

1895        ' 

73-764.754 

64,225,357 

9,539,297 

1900 

105,453,946 

9L783.545 

13,670,401 

1905 

178,965,632 

157,822,737 

21,142,895 

1906 

189,708,567 

166,973,578 

22,734,989 

1907 

195,772,100 

171,561,400 

24,210,700 

The  cost  to  employers  has  been  constantly  increasing. 
This  is  due  not  merely  to  the  increasing  number  of  accidents, 
but  also  in  large  part  to  the  fact  that  premiums  are  now  being 
collected  to  cover,  not  merely  payments  for  accidents  occurring 
at  the  present  time,  but  also  for  those  which  occurred  at  any 
time  since  1885,  when  the  original  law  went  into  effect,  the  work- 
men or  dependents  entitled  to  benefits  being  still  alive. 

Since  membership  in  the  associations  is  compulsory  upon 
all  employers,  there  can  be  no  question  as  to  solvency.  Yet  the 
government,  while  concurring  in  general  with  the  scheme,  has  re- 
quired the  associations  to  collect  enough  to  create  reserves  against 
certain  contingencies.  During  the  first  year,  the  sum  to  be  put 
into  the  reserve,  though  by  no  means  what  would  be  required 

I  12 


GERMANY 


under  the  "capitalized"  value  method,  must  be  equal  to  three 
times  the  amount  paid  out  in  indemnities;  during  the  second 
year,  twice  as  much,  the  ratio  thereafter  decreasing  one-tenth 
each  year  until  the  eleventh  year,  when  the  interest  of  the  reserve 
fund  will  reach  a  certain  fixed  figure.  It  is  thought  that  by 
this  method  the  highest  cost  under  the  assessment  plan  with 
increasing  contributions  when  it  reaches  an  equilibrium  will  not 
be  much  beyond  the  average  annual  cost  under  a  capitalized 
value  system.  Table  27  shows  the  growth  as  well  as  the  condi- 
tion of  the  reserve  fund  at  the  close  of  1907. 

TABLE  27. — AMOUNT  OF  RESERVE    FUND  OF  THE    MUTUAL  ASSOCIA- 
TIONS  OF   EMPLOYERS,    1885-1907 


Year 
1885 
1890 
.895 
1900 
1905 
1906 
1907 


Amount 
(Marks) 

65,813,770 
143,396,460 
169,869,991 
258,603,666 
282,347,962 
302,869,700 


For  purposes  of  illustration,  the  mutual  association  of  em- 
ployers in  the  chemical  industries  is  most  instructive.  This  is  a 
very  large  association  and  an  account  of  its  organization  will 
bring  out  clearly  the  way  the  law  operates.  The  very  nature  of 
the  industry  implies  that  contributing  employers  are  men  of 
scientific  attainment  who  conduct  the  association  on  progres- 
sive and  liberal  lines.  It  covers  all  the  chemical  and  many  of  the 
allied  industries  throughout  the  entire  empire.  At  the  close  of 
1897,  8,720  different  establishments  with  207,704  employes  were 
contributing  members.  The  chief  office  is  in  Berlin,  but  there 
are  eight  branch  offices,  each  with  supervision  over  a  depart- 
ment in  as  many  large  cities  of  the  empire,  Breslau,  Hamburg, 
Cologne,  etc.  The  association  is  controlled  by  a  board  of  seven- 
teen directors,  elected  by  members  as  representatives  of  the 
departments.  Each  of  the  latter  is  under  the  management  of  a 
superintendent  and  inspectors. 

For  purposes  of  assessment,  membership  is  divided  into 
fifteen  classes  according  to  the  estimated  hazard.  In  Class  A  are 
8F  113 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

apothecaries  and  chemical  laboratories  and  such  other  chemical 
works  as  do  not  employ  mechanical  power.  These  are  considered 
the  least  hazardous  and  the  basis  for  the  assessment  is  "20." 
Class  B  includes  establishments  where  celluloid,  asbestos,  water- 
proof and  fire-proof  materials  are  manufactured;  their  assessment 
basis  is  "25."  Thus  the  classes  are  determined  according  to 
hazard  up  to  Class  P,  which  includes  establishments  where  high 
explosives  are  manufactured;  its  assessment  basis  is  "150." 
Rates  are  revised  every  ten  years  on  the  basis  of  experience 
during  the  previous  decade  and  must  be  approved  by  experts 
of  the  Imperial  Insurance  Office. 

In  establishments  of  some  of  these  classes,  accidents  are 
of  common  occurrence.  In  the  year  1907,  the  total  number  of 
accidents  was  13,038.  Of  these,  1,223  involved  disability  of  less 
than  three  days;  9,690  in  all,  involved  disability  of  less  than 
13  weeks  and  were  compensated  therefore  by  the  sickness  in- 
surance societies.  The  remaining  1,789  cases,  of  which  99  re- 
sulted fatally,  received  compensation  from  the  mutual  associa- 
tion of  employers  in  the  chemical  industries.  In  the  chemical 
industry  as  a  whole,  835  cases  of  indemnification,  on  an  average, 
comprising  both  injuries  and  deaths,  are  cared  for  each  year  out 
of  100,000  employes. 

Compensation  paid  during  the  year  1907  amounted  to 
2,855,605  marks  ($713,901).  Of  this  sum  80,422  marks  ($20,105) 
were  incurred  for  medical  treatment,  etc.;  cash  benefits  to  in- 
jured workmen  reached  2,062,586  marks  ($515,646);  funeral 
benefits  11,269  marks  ($2,817),  and  pensions  to  surviving  depen- 
dents over  500,000  marks  ($125,000).  The  awards  of  indemnities 
are  made  by  committees  of  the  association,  appointed  in  each 
department.  The  amount  of  litigation  is  considerable.  In  the  year 
1907,  5,448  awards  were  made  from  which  appeals  were  taken. 
Of  these,  1,115  were  appealed  to  the  courts  of  arbitration  and 
395  of  the  cases  decided  by  the  latter  were  carried  up  to  the 
Imperial  Insurance  Office  for  final  decision. 

Compensation  is  paid  through  the  post  office  which  ad- 
vances whatever  sums  may  be  required.  At  the  end  of  the  year 
individual  members  are  assessed  to  meet  the  disbursements  for  the 
year.  Establishments  of  a  particular  hazard  class  bear  the  losses 

114 


AUSTRIA 

of  that  class;  management  expenses  are  borne  equally  by  all. 
If  an  employer  becomes  bankrupt,  the  association  makes  a  claim 
in  the  same  way  as  any  other  creditor.  The  only  liability  in 
such  cases,  however,  is  the  assessment  for  one  year;  for  no  em- 
ployer can  be  held  for  previous  assessments  if  the  association 
has  failed  to  collect  them.  The  association  of  chemical  employers 
at  present  carries  a  reserve  which  is  fixed  by  law  and  is  not 
mathematically  adequate.  It  amounted  at  the  end  of  the  year 
1907  to  7,407,455  marks  ($i  ,85 1 ,864).  The  employers  are  opposed 
to  the  accumulation  of  even  this  reserve,  for  reasons  given  above. 
They  also  assert  that  the  reserve  is  unnecessary,  since  the  losses 
are  guaranteed  by  all  the  property  of  the  employers  and  also 
by  the  state. 

A  valuable  feature  of  the  work  of  this  association  is  in  the 
prevention  of  accidents.  A  manual  covering  the  many  indus- 
tries of  the  association  is  distributed  to  members;  it  explains  the 
most  approved  method  of  manufacture,  from  the  standpoint 
of  safety.  Plans  of  safety  devices  as  well  as  methods  of  treat- 
ment in  case  of  poisoning  or  accident  are  given,  etc.  In  certain 
instances,  the  association  attempts  more  than  the  law  actually 
requires.  Acute  lead  and  other  poisonings,  for  example,  are  not 
accidents  in  the  strict  sense;  but  they  are  voluntarily  treated 
as  such  and  are  compensated.  Some  other  occupational  diseases 
are  similarly  included.  In  all  cases,  employers  are  held  to  a 
strict  accountability  under  the  rules  and  regulations  of  preven- 
tion, and  in  case  of  flagrant  neglect,  may  be  placed  in  a  higher 
hazard  class  or  may  even  be  brought  to  the  attention  of  the 
authorities.  The  associations  also  have  power  to  enforce  the 
adoption  of  safety  devices  when  new  machinery  or  equipment  is 
installed. 


AUSTRIA 

Austria  was  quick  to  follow  Germany  in  providing  a  sys- 
tem of  compulsory  insurance  for  the  protection  of  its  working- 
men.  Scarcely  had  the  first  of  the  German  laws  gone  into  oper- 
ation, when  two  similar  measures  providing  for  accident  and 
sickness  insurance  were  presented  to  the  Austrian  parliament. 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

Considerably  modified,  an  obligatory  accident  insurance  law  was 
passed  December  28,  1887,  followed  a  few  months  later,  March 
30,  1888,  by  a  sickness  insurance  law. 

Until  that  time,  provision  against  industrial  accidents  had 
been  very  meagre.  The  civil  code  of  1811  had  established 
liability  on  the  basis  of  the  common  law,  which  gave  the  injured 
workman  the  right  to  compensation  only  when  the  accident  was 
due  to  the  direct  fault  of  the  employer.  Later,  the  law  of  March  5, 
1869,  like  the  Prussian  law  of  1838,  made  employers  in  the  rail- 
way industry  liable  for  all  accidents  not  due  to  unavoidable 
causes  or  to  the  negligence  of  the  injured  workmen  themselves. 

In  other  industries,  workmen  remained  under  the  inade- 
quate protection  of  the  common  law.  Attempts  were  made 
by  the  authorities  to  extend  the  scope  of  the  railway  law  to 
other  trades  of  a  dangerous  character,  and  in  the  meanwhile, 
several  private  accident  insurance  agencies  had  been  established. 
The  "Society  of  Austrian  Industrial  Workers  for  Accident  Insur- 
ance," the  "Austrian  General  Accident  Insurance  Company  of 
Vienna,"  and  the  accident  department  of  the  "Patria"  undertook 
accident  business.  Reports  of  the  trade  inspectors,  however, 
showed  that  these  companies  played  an  insignificant  part  in  this 
field  and  were  useless  in  the  most  dangerous  trades.  These  facts 
and  the  pressure  of  public  opinion  aroused  by  the  agitation  in 
Germany,  led  the  authorities  to  drop  their  proposed  liability 
measure  and  to  present  to  parliament,  in  1883,  a  compulsory 
accident  insurance  bill.  After  much  investigation  and  discussion, 
a  revision  was  brought  forward  on  January  28,  1886,  and  was 
passed  on  December  28,  1887.  This,  together  with  the  later 
revision  of  July  20,  1894,  constitutes  the  law  at  the  present 
time. 

The  statute  of  1887  covers  workingmen  and  supervising 
employes  in  factories,  foundries,  mines,  wharves,  quarries,  build- 
ing operations  and  all  industrial  pursuits  in  which  machines  or 
explosive  substances  are  employed.  The  revision  of  1894  ex- 
tended the  law  to  cover  workingmen  engaged  in  railways  and 
transportation,  storage,  theatrical  undertakings,  fire  prevention, 
street  cleaning,  chimney  cleaning  and  canal  work.  The  laws, 
therefore,  include  the  large  trades  and  exclude  the  small  indus- 

116 


AUSTRIA 

tries,  as  well  as  agriculture  and  forestry,  with  the  exception  of 
those  where  steam  or  other  motors  are  employed. 

Insurance  is  provided,  not  as  in  Germany  through  trade- 
associations  (Berufsgenossenschaften),  but  through  territorial 
organizations  (Anstalten),  composed  of  all  the  various  industries 
of  that  district.  There  are  seven  such  organizations,  conducted 
under  the  supervision  of  the  government  insurance  office  and 
the  Minister  of  the  Interior.  All  officers  arid  employes  are  ap- 
pointed by  the  government.  The  executive  committee,  adminis- 
tering the  affairs  of  each  organization,  is  composed  of  elected 
representatives  of  employers  and  of  employes  and  persons  ap- 
pointed by  the  government  in  equal  numbers.  In  addition 
to  the  above  organizations,  trade  associations  and  private  com- 
panies are  permitted  to  carry  accident  insurance  under  certain 
conditions.  But  up  to  the  present,  only  one  such  trade  associa- 
tion, that  of  the  railway  employers,  has  been  established. 

As  in  Germany,  graded  compensation  is  paid  for  all  injuries, 
including  those  resulting  in  death.  It  is  somewhat  more  limited 
than  that  granted  by  the  German  law  and  is  as  follows:  In  case 
of  complete  incapacity,  a  pension  of  60  per  cent  of  the  wages; 
in  case  of  partial  incapacity,  a  pension  correspondingly  reduced 
which  may  in  no  event  exceed  50  per  cent  of  the  wages.  These 
indemnities  begin  only  after  the  fifth  week  from  the  date  of  acci- 
dent. Until  this  time  benefits  are  paid  by  the  sickness  insurance 
society  which  also  affords  free  medical  attendance  or  hospital 
care.  In  case  of  death,  funeral  expenses,  limited  to  50  kronen  ($10), 
are  paid,  and  pensions  not  exceeding  in  the  aggregate  50  per  cent 
of  the  yearly  wages  are  given  to  widow  and  orphans  or  other 
dependents.  Yearly  wages  are  treated  as  300  times  the  average 
daily  wage  of  the  injured  workingman  during  his  last  work-year, 
with  a  maximum  of  2400  kronen  ($480)  for  adults  and  600 
kronen  ($120)  for  apprentices. 

During  the  waiting  period  of  four  weeks,  cost  of  medical 
treatment  and  other  benefits  are  paid  by  the  sickness  insurance 
society  to  which  the  injured  workman  belongs.  Should  the 
disability  extend  beyond  that  time,  the  society  continues  its 
payments  for  16  additional  weeks,  the  money  being  refunded 
later  by  the  territorial  accident  insurance  institution.  After 

117 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

that  period  elapses,  the  employe,  if  still  disabled,  is  given  an 
invalidity  pension  or  is  cared  for  by  the  insurance  institution 
until  cured  or  until  permanent  invalidity  sets  in.  The  above 
compensations  are  determined  in  the  first  instance  by  boards 
of  physicians  connected  with  the  territorial  insurance  institu- 
tions, and  must  be  confirmed  by  a  so-called  "  Pension  Commission." 
Attached  to  each  institution  is  a  court  of  arbitration  to  which 
appeals  from  the  decision  of  the  commission  may  be  made. 
This  body  consists  of  five  members,  a  state  judicial  official  as  chair- 
man, two  experts  appointed  by  the  government  and  one  elected  rep- 
resentative each  of  the  employers  and  the  workmen  respectively. 
The  decision  of  this  body  is  final.  All  applications  for  compen- 
sation must  be  made  within  one  year  from  the  date  of  accident. 

Pensions  and  other  payments  of  insurance  institutions 
are  made  monthly  by  means  of  post-bank  checks.  The  law, 
unlike  that  in  Germany,  permits  the  settlement  of  claims  by  a 
lump  sum  to  the  pensioner,  provided  the  charity  officials  of  the 
town  consent.  It  further  discontinues  the  pensions  totally  or 
partially  when  the  recipient  engages  in  remunerative  employment. 

The  Austrian  law  differs  chiefly  from  the  German  in  the 
manner  in  which  the  funds  necessary  for  the  maintenance  of 
insurance  institutions  are  raised.  In  the  first  place,  workingmen 
contribute.  The  employers  pay  all  the  cost,  but  are  permitted 
to  deduct  10  per  cent  from  the  wages  of  their  employes.  This 
serves  to  compensate  the  employers  for  the  short  waiting 
period  at  the  end  of  which  the  injured  workman  begins  to  re- 
ceive payment  from  the  insurance  institutions.  This  period  is 
four  weeks,  instead  of  13  as  in  Germany.  The  insurance  and 
the  premiums  are  on  the  capitalized  value  system  instead  of 
on  the  assessment  plan  as  in  Germany.  That  is,  the  year's  pre- 
miums are  intended  to  include  provision  for  a  reserve  sufficient  to 
cover  all  annuities  accruing  because  of  the  accidents  of  the  year. 

Premiums  are  computed  according  to  the  hazard,  the 
various  industries  being  divided  by  law  into  12  classes,  each  of 
which  is  still  further  subdivided.  Two  additional  classes,  A  and 
B,  embracing  the  smallest  hazards,  were  added  by  the  amendment 
of  1894.  The  following  are  the  coefficients  of  the  twelve  main 
classes  and  the  two  additional  classes  in  force  at  the  present  time: 

118 


AUSTRIA 


TABLE  28. — CLASSIFICATION    OF    INDUSTRIES    BY   HAZARDS,    IN  THE 
TERRITORIAL   ACCIDENT   INSURANCE   ORGANIZATIONS 


Class 
A 
B 
I 

II 

III 

IV 

V 

VI 

VII 

VIII 

IX 

X 

XI 

XII 


Coefficient 
'  —  3 


7—  n 
10  —  14 
13—19 
16  —  24 
20  —  30 

25—37 

3'—  47 
3^—57 
48—70 


73-100 


According  to  this  plan,  each  industry  is  assigned  to  one 
or  other  of  the  14  classes,  individual  establishments  later  being 
assigned  their  specific  coefficient  within  their  class  by  the  insur- 
ance institution  of  their  district. 

The  unit  contribution,  namely,  the  contribution  correspond- 
ing to  the  coefficient  i  of  the  tariff,  was  originally  fixed  by  the 
government  at  0.0567  per  cent  of  the  annual  wages  paid  in  the 
establishment.  This  rate  was  in  force  for  all  companies  from 
1889  to  1897.  On  July  i,  1897,  the  Vienna  association  advanced 
the  rate  10  per  cent  and  this  advance  was  followed  later  by  the 
institutions  at  Prague  and  Lemberg.  The  rate  was  in  this  way 
raised  to  0.0624  per  cent  of  the  wages.  In  spite  of  the  increase, 
a  considerable  deficit,  from  the  actuarial  standpoint,  was  still  ap- 
parent in  the  institutions  at  the  close  of  each  year,  and  in  1900 
rates  were  raised  still  further. 

Because  of  different  conditions  prevailing  in  the  several 
districts,  each  of  the  seven  institutions  was  permitted  a  rate  of 
its  own  as  follows: 

TABLE  29. — RATES  OF  CONTRIBUTION  IN  THE  SEVEN  TERRITORIAL 

INSURANCE  ORGANIZATIONS 
District  Per  cent  of  wages 

Vienna  and  Prague 0.0781 

Salzburg 0.0670 

Brunn 0.0610 

Graz 0.0567 

Trieste 0.0602 

Lemberg 0.0710 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

Table  30  gives  rates  for  each  danger  class  in  the  insurance 
institutions  of  Vienna  and  Prague  worked  out  by  these  co- 
efficients. 


TABLE   30. — RATES    OF    CONTRIBUTION    FOR    EACH    DANGER  CLASS 


Danger 
Class 

Coeffi- 
cient 

P*  r  Ow/ 
o/  Jf  <jg« 

•Danger 
Class 

Coeffi- 
cient 

Per  Cent 
of  Wages 

Danger 
Class 

Coeffi- 
cient 

Per  Cent 
of  Wages 

i 

0.08 

'3 

i.  02 

39 

3.05 

A 

2 

0.16 

IV 

16 

1-25 

IX 

48 

3-75 

3 

0.23 

•9 

1.48 

4-45 

3 

0.23 

16 

1.25 

48 

3-75 

B 

4 

0.31 

V 

20 

1.56 

X 

59 

4.61 

5 

0.39 

24 

1.87 

70 

5-47 

4 

0.31 

20 

1.56 

59 

4.61 

I 

6 

0.47 

VI 

25 

'•95 

XI 

73 

5.70 

8 

0.62 

30 

2.34 

87 

6.79 

7 

0.55 

25 

'•95 

73 

5.70 

II 

9 

0.70 

VII 

3' 

2.42 

XII 

87 

6.79 

ii 

0.86 

37 

2.89 

100 

7.8, 

10 

0.78 

3' 

2.42 

III 

12 

0.94 

VIII 

39 

3.05 

'4 

1.09 

47 

3.67 

On  this  basis,  the  unit  contribution,  corresponding  to  the 
coefficient  i  for  the  insurance  institutions  in  Vienna  and  Prague, 
is  0.0781  per  cent  of  the  annual  wages  paid  in  the  establishment. 
Higher  coefficients  carry  higher  contributions  in  exact  proportion. 
An  establishment  of  Class  IV,  for  example,  whose  coefficient  was 
the  mean  for  that  class,  namely,  16,  would  be  taxed  16  times 
0.0781  per  cent,  or  at  i  .2496  per  cent  of  the  wages.  If  the  payroll 
of  this  establishment  for  the  year  was  $10,000,  the  contribution 
from  the  establishment  would  be  $124.96.  These  rates  are  now  in 
force,  the  revision  of  1905  having  preserved  the  figures  for  1900. 

It  is  to  the  interest  of  each  employer  to  cut  down  the  num- 
ber of  accidents  in  his  establishment,  as  his  annual  contribution 
may  then  be  appraised  on  the  basis  of  a  lower  danger  coefficient. 
This  is  the  chief  factor  in  the  campaign  of  accident  prevention 
in  Austria,  insurance  institutions  not  being  permitted  to  make 
preventive  regulations,  as  is  the  case  in  the  trade  associations  of 
Germany. 

Under  the  capitalized  value  system,  the  adequacy  of  the 

120 


AUSTRIA 

reserve  fund  is,  of  course,  of  the  greatest  consequence.  Accord- 
ing to  the  law,  each  insurance  institution  must  annually  set  aside 
a  sum  for  the  reserve,  the  amount  of  which  is  fixed  by  the  Min- 
ister of  the  Interior.  The  surplus,  if  any,  accruing  each  year 
is  also  applied  to  the  same  fund;  but  the  total  reserve  must,  in 
any  case,  amount  to  more  than  10  per  cent  of  the  funds  neces- 
sary to  cover  the  liabilities  of  the  insurance  institution.  Of  the 
annual  additions  to  the  fund,  two-thirds  must  be  applied  to  the 
establishment  of  a  special  reserve  fund  for  the  institution  itself, 
and  one-third  to  a  common  fund  for  all  institutions. 

The  amendment  of  July  20,  1894,  which  went  into  effect 
January  i,  1895,  extended  the  provisions  of  the  law  to  the  classes 
already  indicated.  About  200,000  additional  employes,  engaged 
in  10,000  undertakings,  were  added.  It  also  provided  that  all 
persons  employed  by  railways  and  therefore  subject  to  the  lia- 
bility law  of  ,1869  should  receive  compensation  up  to  the  full  value 
of  yearly  wages  instead  of  being  limited  to  2400  kronen  ($480) 
as  in  other  trades.  These  employes  also  pay  no  contributions  to 
the  railway  trade  association,  and  when  injured,  receive  consider- 
ably higher  benefits  than  employes  of  other  classes.  For  disabil- 
ity, compensation  was  increased  one-half,  namely,  to  90  per  cent 
of  their  annual  wages;  for  permanent  invalidity,  to  120  per  cent; 
while  in  case  of  death,  dependents  may  receive  pensions  aggre- 
gating two-thirds  of  the  annual  earnings. 

This  amendment,  moreover,  made  possible  the  extension 
of  insurance  on  a  voluntary  basis.  Proprietors  of  establishments 
subject  to  the  law  were  permitted  to  insure  themselves  and 
others  of  their  staff  in  the  insurance  institution  of  their  district. 
On  the  other  hand,  employers  in  establishments  exempt  from 
compulsory  insurance  were  permitted  to  insure  their  entire  force 
under  one  collective  policy.  Very  little,  however,  has  resulted 
from  this  provision. 

The  first  obligatory  accident  insurance  law  went  into  effect 
in  November,  1889.  The  government  statistics  begin,  therefore, 
with  the  year  1890.  The  last  government  report  at  present 
available  is  that  of  1906,  giving  the  results  of  16  years  of  con- 
tinuous operation.  Table  3 1  indicates  the  growth  of  the  system 
in  number  of  establishments,  persons  insured,  and  in  payrolls. 

121 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 


TABLE  31. — NUMBER  OF  INDUSTRIAL  AND  AGRICULTURAL  ESTAB- 
LISHMENTS, AVERAGE  NUMBER  OF  INSURED  EMPLOYES  AND 
AMOUNT  OF  WAGES 


NUMBER  OF 

AVERAGE  NUMBER  OF 

WAGES    INSURED 

ESTABLISHMENTS 

EMPLOYES  INSURED 

(Million  Kronen) 

^| 

42      «•! 

"H-s 

I 

ill 

| 

*">  *^ 
"3^o 

i.   >»  •* 

/  CUT 

•c  s 

a  S  ° 

-C  S 

^  §.£ 

'K  S 

S  P  V< 

S'S 

^^•^ 

Total 

"a  -2 

"s"5^ 

Total 

5^ 

"»^2 

Total 

13 

23 

'5,|.| 

23 

•**  ****     ^^ 

14] 

^[q^l 

uj 

i2^) 

UJ 

^Uj2 

1890 

53>i91 

78.133 

131.326 

893.324 

338,494 

1,231,818 

470.52 

3.36 

473-88 

1895 

81,516 

134,257 

215.773 

1,381,307495,887 

1,877,194 

866.66 

7.98 

874.64 

I90O 

94.327 

193.563 

287,891 

1,693,600678,613 

2,372,213 

1,160.19 

10.70 

,170.89 

I9O2 
1904 
1905 
1906 

103,1  14 
108,033 
109,185 
113,691 

255,203 
264,470 
299,437 

3  ".385 

3  58,3'  7 
372,503 
408,622 

425,076 

1,722,925 

1,874.391 
1,913,008 
2,01  1,063 

812,592 

3i2,6n 

893,215 
907,616 

2,535.5'7 
2,687,002 
2,806,223 
2,918,679 

1,204.87 
1,336-67 
1,387-98 
1,506.32 

10.87 
1  I.  O2 
12.05 
12.76 

,215,74 
,347-69 
,400.03 
,519.08 

While  the  number  of  establishments  and  of  workingmen 
insured  has  increased  continually,  it  is  clear  from  the  above 
figures  that  the  insured  still  form  a  relatively  small  portion  of 
the  wage-earning  population.  It  must  be  remembered,  however, 
that  Austria  is  not  an  industrial  country  like  Germany.  The 
greater  part  of  the  10,000,000  wage-earners  are  engaged  in  agri- 
culture, and  of  these,  only  those  employed  where  steam  or  other 
motive  power  is  used,  are  insurable. 

A  relatively  large  number  of  the  insured  are  women.  In 
1906,  they  formed  21.1  per  cent  of  the  total  and  their  proportion 
is  constantly  increasing.  In  agriculture  it  is  much  higher,  and 
in  some  districts  they  actually  outnumber  the  men. 

Before  proceeding  to  a  discussion  of  accidents,  attention 
should  be  directed  to  an  interesting  device  by  which  the  Austrian 
authorities  have  made  possible  a  comparison  of  accident  rates  in 
various  industries.  In  agriculture,  for  instance,  work  where 
steam  or  other  motive  power  is  used  is  of  a  temporary  character 
and  the  number  of  accidents  is  correspondingly  small.  It  would 
therefore  lead  to  confusion  to  compare  accident  statistics  of 
agriculture  with  those  of  other  fields  where  employment  is  more 
regular.  The  authorities  accordingly  have  converted  the  total 

122 


AUSTRIA 

number  of  insured  in  any  one  industry  into  a  corresponding 
number  of  full-time  workers;  namely,  those  working  300  days 
a  year.  In  making  reports,  establishments  are  required  to  indi- 
cate, not  only  the  number  of  workmen  in  their  employ,  but  also 
the  length  of  employment  of  each.  By  dividing  by  300  the  total 
number  of  days'  work  done  in  the  establishment  the  total  number 
of  full-time  workers  is  obtained.  In  this  way,  the  2,918,679 
insured  persons  for  1906  are  reduced  to  1,726,823  full-time 
workers.  With  the  corresponding  figures  for  individual  trades, 
it  is  then  possible  accurately  to  compare  the  rate  of  accidents  in 
the  different  industries,  even  though  they  differ  in  the  number  of 
days  of  operation  during  the  year. 

Table  32  gives  the  number  of  accidents  of  all  kinds  reported 
during  certain  years,  as  well  as  the  rate  per  10,000  full-time 
workers. 

TABLE     32. — TOTAL    NUMBER    OF    ACCIDENTS     AND    NUMBER     PER 
IO,OOO   FULL-TIME  WORKERS,    1890-1906 

Per  10,000 

Year  Number  of  Accidents  Full-time  Workers 

1890  .  16,041  1 94.9 


1895 
1900 
1902 
1903 
1904 
1905 
1906 


54,562  448.4 

80,534  550.7 

84,003  566.3 

88,155  580.5 

99,744  619.8 

103,735  630.4 

109,118  631.9 


As  in  Germany  and  other  countries,  accidents  have 
increased  out  of  all  proportion  to  the  increase  in  the  number 
insured.  This,  as  in  other  countries,  may  in  all  probability  be 
explained  by  the  more  careful  reporting  of  accidents,  the  greater 
complexity  of  machinery  and  the  more  arduous  character  of  the 
employment,  though  also  in  some  degree  by  simulation. 

The  above  figures  represent  reported  accidents.  Of  the 
109,1 18  for  1906,  77,649,  or  over  71  per  cent,  led  to  injuries  of  a 
temporary  character,  lasting  less  than  four  weeks.  These  were 
cared  for  by  sickness  insurance  societies.  The  remaining  3 1 ,469 
disabilities  lasted  over  four  weeks  and  were  subject  to  compen- 
sation under  the  accident  law.  Table  33  shows  conditions  in  this 
regard  since  1890. 

123 


INSURANCE    AGAINST    INDUSTRIAL    ACCIDENTS 


TABLE  33. — NUMBER  OF  ACCIDENTS  AND  NUMBER  PER  IO.OOO 
FULL-TIME  WORKERS  REQUIRING  AND  NOT  REQUIRING  COM- 
PENSATION, 1890-1906 


REQUIRING  COMPENSATION 

Total  Not 

Fatal 

Not  Fatal 

Total 

Compensation 

Year 

=^5: 

"a  t- 

1  2 

"a  2 

£| 

<*..* 

u..  ^ 

Num- 
ber 

ii 

0 

Num- 
ber 

II 

0 

Num- 
ber 

|l 

Num- 
ber 

i.l 

o  v 

—            v, 

i-s 

*J 

1* 

1890 
1895 

^35 

6-7 
6.8 

6,193 
15,560 

75-2 
127.9 

6,74  1 
16,395 

81.9 
'34-7 

9,300 
38,.  67 

I  13.0; 
3'3-7 

1900 

1,003 

6.8 

22,036 

150.7    23,039    157.5    57,495    393.2 

1902 

901 

6.1 

24,412 

164.6    25,3131170.7    58,690:395-7 

1903 

. 

909 

6.0 

24,550 

161.7 

25,459     167.7    62,696    4'2.8 

1904 
1905 

'.037 
i,i  1  1 

6-4 
6.8 

27,676 

165.2 
168.2 

27,612 
28,787 

171.6   72,132    448.2 
175.0    74,948    455.4 

"  All 
associations 

|  1,089 

6-3 

30,380 

'75-9 

3  '.469 

182.2 

77.649 

449-7 

1906 

Territorial 
associations 

}    878 

5-9 

26,026 

"74-4 

26,904 

180.3 

61,093 

409.5 

Railroad 
associations 

}    2" 

9-o 

4-354 

,85-3 

4,565 

'94-3 

16,556 

704-7 

The  greatest  increase  has  been  in  accidents  inflicting  in- 
juries of  a  temporary  character  and,  therefore,  except  for  tem- 
porary benefits  from  sickness  insurance,  not  open  to  compensa- 
tion under  the  law.  Fatalities  have  remained  nearly  stationary, 
and  although  accidents  resulting  in  incapacity  have  increased 
since  1890,  the  increase  is  much  less  marked  than  that  for  acci- 
dents not  open  to  compensation.  Comparing  the  above  figures 
with  those  of  Germany,  we  find  much  the  same  conditions  in 
both  countries.  For  1906,  we  obtain  370  reported  accidents 
per  10,000  insured  (not  full-time  workers)  for  Austria,  and  311 
reported  accidents  per  10,000  insured  in  Germany.  The  in- 
crease in  the  number  of  accidents  receiving  compensation  has 
been  also  at  about  the  same  rate  in  the  two  countries,  that  for 
Germany  being  220  per  cent  from  1890  to  1906,  and  that  for 
Austria  212  per  cent  during  the  same  period. 

124 


AUSTRIA 


The  most  striking  difference  is  in  the  relative  number  of 
compensated  accidents  in  the  two  countries.  Comparing  the 
figures  given  by  the  two  governments  for  1906,  we  obtain  66.7 
compensated  accidents  per  10,000  insured  in  Germany*  and  182.2 
per  10,000  full-time  workers  for  Austria.  In  this  form,  however, 
the  Austrian  figures  are  not  strictly  comparable  with  those  of 
Germany  as  the  10,000  in  Austria  are  full-time  and  not  insured 
workers.  Making  the  necessary  corrections,  the  figures  for 
Austria  become  107.95  Per  10,000  insured.  The  fact  that  there 
were  4 1  fewer  compensated  accidents  per  10,000  insured  in  Ger- 
many in  1906  may,  however,  be  due  largely  to  the  difference  in 
the  waiting  period  in  the  two  countries,  German  trade  associations 
being  relieved  of  the  necessity  of  compensating  the  large  number 
of  injured  whose  incapacity  does  not  continue  beyond  13  weeks, 
and  Austria  only  of  those  whose  incapacity  does  not  continue 
beyond  four  weeks. 

Table  34  gives  the  number  of  insured  full-time  workers  and 
the  relative  accident  rates  for  56  different  industries  under  the 
law,  in  the  course  of  the  year  1906. 

TABLE  34. — NUMBER  OF   FULL-TIME   WORKERS   INSURED   AND 
PROPORTION    OF   ACCIDENTS    FOR   56   INDUSTRIES,   1906 


Manufactures,  Trades,  Industries 

Number 
Full-time 
Workers 
Insured 

ACCIDENTS  PER  10,000 
FULL-TIME    WORKERS 

Reported 

Inca- 
pacity 

Death 

i  .  Agriculture  and  forestry  (using  motors) 

35.841 

391.2 

220.4 

10.3 

2.  Mills. 

20,255 

374-2 

164.4 

10.9 

3.   Railroads 

240,360 

897-3 

184.0 

8.9 

4.  Inland  transportation 

29,669 

848.7 

306.4 

12.5 

5.  Water  transportation 

5.946 

856.0 

269.1 

21.8 

6.  Warehouses     . 

1  1,312 

716.9 

267.8 

6.2 

7.   Foundries  and  allied  in 

iustr 

ies 

35.843 

2,512.6 

404.3 

1  0.0 

8.  Quarries  . 

28,921 

873.1 

384.8 

27.3 

q.   Pits  .... 

3,'3' 

702.7 

300.2 

47-9 

10.  Stone  works    . 

'7.355 

538.7 

194.7 

7-5 

1  1.   Earth  works    . 

70.527 

279-5 

99-3 

5-5 

12.  Glass  works     . 

32,389 

305.0 

78.. 

1.2 

13.  Precious  metal  works 

2,842 

233-3 

41.8 

14.   Iron  and  steel 

65,846 

975-5 

218.8 

2.0 

15.  Rough  meta!  and  alloying  works 

27,990 

550.6 

138.6 

0.7 

*  See  Table  16,  page  103. 
I25 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 


TABLE  34  (continued). — NUMBER  OF  FULL-TIME  WORKERS  INSURED 

AND   PROPORTION  OF  ACCIDENTS  FOR  56  INDUSTRIES,  1906 


Number 

ACCIDENTS  PER  10,000 

Manufactures,  Trades,  Industries 

Full-Time 

1  1/  '-,—  L,,—  - 

FULL-TIME  WORKERS 

workers 
Insured 

Reported 

Inca- 
pacity 

Death 

1  6.  Machines,    tools,    instruments    and    ap- 

paratus        

69,136 

1,489.7 

348.6 

3-° 

17.  Means  of  transportation 

22,149 

1,655,6 

347-2 

2-7 

18.  Firearms         

4,032 

704.4 

166.2 

4-9 

19.  Physical  and  surgical  instruments 

14,786 

988.8 

173.1 

2.0 

20.  Musical  instruments      .... 

2,860 

356.6 

'43-4 

3-5 

21.  Use  of   motors  for  transportation    and 

transfer  of  power      .... 

i,7" 

239.6 

76.0 

5-8 

22.  Factories  of  chemical  products    . 

10,808 

416.4 

156.4 

6.5 

23.  Dye  stuffs  and  dyes      .... 

4,690 

380.0 

104.5 

24.  Tar  and  rosin         

1,969 

614.4 

167.6 

20.3 

25.  Explosive  materials      .... 

3,866 

364-7 

64.6 

5-2 

26.  Inflammable  materials 

4,776 

113.1 

7'-3 

2.0 

27.  Manure  and  fertilizer    .... 

2.533 

493-5 

146.1 

1  1.8 

28.  Heat  and  light  materials 

'7,9i4 

520.3 

145.1 

3-9 

29.  Oils  and  fats  

3,018 

649.4 

178.9 

1  6.6 

30.  Lighting  and  heating    .... 

5,896 

524.1 

103.4 

,3.6 

31.  Silk          

19,701 

74-  1 

20.3 

32.  Wool  and  other  animal  fibres 

63,775 

189.7 

63.5 

'•7 

33.  Flax,  hemp,  oak,  jute  .... 

32-905 

170.8 

68.4 

1.8 

34.  Cotton  and  shoddy        .... 

127,972 

'33-9 

54.2 

0.6 

35.  Bleaching,     dye    works,     printing    and 

finishing      

34,595 

3i8.s 

104.1 

2.0 

36.  Embroidery,  lace  weaving,  etc.  . 

25,206 

67.8 

22.6 

0.4 

37.  Paper  making,  etc  

32,644 

431.6 

148.3 

3-3 

38.  Paper  works,  excluding  paper  making 

15,360 

33  '-4 

II5.9 

0.6 

39.  Leather  and  substitutes 

15,126 

415.2 

163.9 

7-3 

40.  Manufacture  of  leather  goods 

i,549 

187.2 

25.8 

41.  Gum,  gutta  percha  and  celluloid 

5,053 

387.9 

73-2 

42.  Manufacture  of  wood  stuffs 

68,915 

831.4 

379-5 

I2.O 

43.  Manufacture  of  woven  stuffs  and  brushes 

752 

266.0 

79.8 

44.  Manufacture  of  horn  and  meerschaum 

5-43° 

267.0 

86.6 

45.  Vegetable  and  animal  food  stuffs 

71,506 

445.1 

,55.6 

5-5 

46.  Liquors    

51,501 

569.5 

182.7 

5-4 

47.  Tobacco  

36,531 

52-3 

'4-5 

48.  Clothing  

33-  '36 

156.9 

32.0 

0.6 

49.  Cleaning  

7,856 

194.8 

59-8 

2.6 

50.  Building  works      

161,849 

830.9 

237.0 

I  1.2 

51.  Construction  works       .... 

35,556 

790.3 

298.4 

17.2 

52.  Allied  building  trades    .... 

24,070 

637-3 

194.0 

5.0 

53.  Scaffolding  for  building 

5,400 

348.1 

it  i.i 

9-3 

54.  Polygraphic  trades        .... 

30,481 

236.2 

60.7 

I  0 

55.  Theatrical  undertakings 

5,406 

67-4 

25-9 

56.  Voluntarily  insured       .... 

16,172 

203.4 

71.1 

8.0 

Total  

1,726,824 

631.9 

'75-9 

6-3 

126 


AUSTRIA 


As  a  result  of  the  above  accidents  and  those  of  preceding 
years,  there  were  in  force  in  1906,  89,354  permanent  pensions,  with 
a  total  annual  value  of  16,783,905  kronen  ($3,356,781).  Table  35 
shows  the  growth  of  these  pensions  in  number  and  value. 

TABLE    35. — NUMBER    AND    AMOUNT    OF    CURRENT     PERMANENT 
PENSIONS,    1897-1906 


1897 
1900 
1902 
1904 
1905 
1906 


26,252 
47,920 
62,948 
75,848 
81,496 
89,354 


4,3 '3,404 
8,391,976 
1 1,406,756 
13,945,689 
15,163,108 
16,783,905 


Of  these  89,354  pensions  in  1906,  69,531  were  payable  to 
workmen  permanently  incapacitated  either  completely  or  partially, 
the  average  amount  of  each  being  193.6  kronen  ($38.72);  8089 
were  pensions  to  widows  for  an  average  amount  of  208.6  kronen 
($41.72)  and  10,894  to  children  for  an  average  amount  of  138.8 
kronen  ($27.76) ;  and  finally,  840  were  to  surviving  parents  for  an 
average  amount  of  146.8  kronen  ($29.36).  The  Austrian  law  does 
not  give  sick  benefits  or  medical  or  hospital  treatment  to  injured 
workmen  except,  as  stated,  through  sickness  insurance  societies. 
The  main  item  is  for  pensions,  but  the  cost  of  burial  is  also  paid 
and  lump  sums  are  given  to  widows  upon  remarrying.  Table  36 
gives  the  value  of  these  various  items  for  1904,  1905,  and  1906. 

TABLE   36. — AMOUNT  OF     BURIAL    BENEFITS    AND    PENSIONS    PAID, 

1904-1906 


Kinds  of  Benefits  and  Pensions 

1904 
(Kronen) 

1905 

(Kronen) 

1906 
(Kronen) 

Burial  expenses        
Pensions  to  dependents: 
Widows         .... 
Children        .       .       .        .  » 
Parents          .... 
Pensions  to  injured  workmen: 
During  medical  treatment  . 
After  medical  treatment    . 
Lump  sums  to  widows  remarrying,  etc. 

48,524 

1,338,925 
',276,357 
104,650 

3,294,368 

13-905,59° 
526,063 

49,98o 

1,470,497 
1,359,196 
1  16,879 

2,441,659 
16,477,828 
591,768 

51,982 

1,636,653 
1,479,214 
1  18,369 

2,506,1  14 
18,046,824 
535,818 

Total      

20,494,477 

22,507,807 

24,374,974 

127 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 


During  1906,  12,824  permanent  pensions  were  added  to 
the  total.  Of  these,  10,010  were  to  workmen  permanently 
incapacitated  and  2814  to  survivors  of  those  fatally  injured. 
Table  37  classifies  these  under  their  various  heads  and  gives  the 
average  value  of  the  annual  pensions  received. 

TABLE    37. — NUMBER  OF    PENSIONERS,   AVERAGE    ANNUAL  PENSION 
AND  PER  CENT  OF  WAGES,    1906 


THtRITORIAL 

RAILROAD 

ALL 

ASSOCIATIONS 

ASSOCIATIONS 

ASSOCIATIONS 

s 

K 

1 

s: 

S 

_o 

£^ 

"s 

sioners 

S 

V 

ft. 

^ 

ioners 

£ 

1 

Character  of  Pension 

V, 

ft. 

s  s 

R    g 

e> 

R 

<£ 

IP 

R 

ft. 

ii 

V 

Q 

•^  ^ 

0. 

"o" 

^  ^ 

ft, 

"g1 

•^  ^ 

ft, 

w 

« 

V   «0 

fe 

M  ^^ 

v  5 

K 

H 

5 

if 

1°  0° 

Jm 

53 

S51 

Jt 

| 

2  o3 

s 

^* 

* 

1 

^* 

S 

^* 

*o  dependents: 

Widows    . 
Children  . 

5^7 

1.145 

!67.87 
104.52 

'7-79 

I  I.OO 

302 
594 

365.OO 
230.35 

26.26 
,6.77 

899 
1,839 

234.09 
I45.I6 

21.41 
13.36 

Parents    . 

K 

134.13 

16.48 

21 

2O6.03 

22.96 

76 

153-99 

18.40 

~otal  to  dependents 

'.897 

125.31 

13.28 

917 

274.13 

20.04 

2,814 

.73.8. 

1  6.06 

'o   permanently    in- 

jured        workmen 

completely  incapa- 

citated: 
Ho  *  .       .       .       . 

262 
592 

469-55 
348.02 

60.00 
47-20 

185 

'94 

1,322.74 
952.59 

83.31 

64.21 

447 
786 

822.66 
497.24 

73-50 
53-98 

••  i  .       •       •       • 

462 

299.17 

38-53 

109 

6lO.69J49.25 

5711358.63  41.46 

•  "    i  •        •        •        • 

93' 

222.52 

28.07 

191 

506.89 

35-47 

1,122 

270.93   30.07 

2,610 

131.33 

16.24 

227 

292.21 

20.32 

2,837 

I44.2O!  16.78 

-        ».         •        •        • 

4.  '53 

65.86 

7-32 

94 

IO2.30 

9-07 

4.247 

66.67 

7-37 

Total  to  injured  . 

9,010 

143.25 

17.01 

1,000 

668.84 

47.03 

IO.OIO 

19576 

21-75 

Total  pensions     . 

10,907 

129.27 

16.30 

i.9«7 

480.03 

34.38 

12,824 

190.94 

20.32 

128 


AUSTRIA 


As  has  been  pointed  out,  the  managers  of  the  insurance 
institutions  must  set  aside  the  capitalized  values  of  future  pen- 
sions as  a  liability.  These  sums,  together  with  cost  of  manage- 
ment and  indemnities  noted  above,  are  the  total  disbursements 
for  the  year.  Table  38  gives  the  figures  for  1904,  1905  and  1906. 

TABLE   38. — TOTAL   DISBURSEMENTS   OF    INSURANCE    ASSOCIATIONS, 

1904-1906 


Kind  of  disbursements 

1904 

(Kronen) 

1905 
(Kronen) 

1906 

(Kronen) 

Indemnities       
Cost  of  collection,  trade  inspection,  court 
of  arbitration  and  management  ex- 
penses         
All  other  expenditures    .... 
Capital  set  aside  to  meet  future  pensions 
To  special  reserve  fund 

20,494,477 

3,363,506 
626,61  1 
17-967.582 
9,230 

22,507,807 

3.5'7.365 
682,340 

33,179,384 
12,31  1 

24.374.974 

3,847,767 
1,398,913 
22,672,894 
347.489 

Total     

42,461,406 

59,899,207 

52,642,037 

Of  considerable  interest  are  the  figures  under  the  general 
head  of  management  expenses.  For  the  year  1906,  these  reached 
the  sum  of  3,847,767  kronen  ($769,553),  or  10.2  per  cent  of  the 
total  contributions  and  16  per  cent  of  indemnities  paid.  Table  39 
shows  the  ratio  of  this  item  to  contributions  and  indemnities 
since  the  beginning  of  operations. 


TABLE     39. — RATIO     OF     MANAGEMENT     EXPENSES    TO    CONTRIBU- 
TIONS  AND   INDEMNITIES,    1890-1906 

Year  Per  Cent  of  Contributions          Per  Cent  of  Indemnities 

1890  .  9.7  i 80 

1895  •  '0.9  33 

1900  .  9.2  18 

1902  .  10.6  17 

1904  •  10.7  16 

1905  .  10.4  16 

1906  .  10.2  16 

The  seven  district  insurance  institutions  and  the  railway 
association,  together,  received   during    1906,  37,710,217  kronen 
($7,542,043)  in  premiums.     To  this  sum   must  be  added  other 
9^  129 


INSURANCE   AGAINST   INDUSTRIAL    ACCIDENTS 

items,  including  interest  and  income  from  other  sources,  making 
a  total  income  of  45,080,681  kronen  ($9,016,136).  Table  40  gives 
the  figures  for  the  years  1904,  1905  and  1906  under  their  several 
heads. 


TABLE  40. — PREMIUMS,  INTEREST  AND  OTHER  INCOME  OF  INSURANCE 
ASSOCIATIONS,    1904-1906 


Income. 

1904 
(Kronen) 

1905 
(Kronen) 

1906 
(Kronen) 

Premiums         
Interest     
From  variations  in  exchange  rate  . 
All  other  incomes     

3  '.405,253 
4,886,405 
238,282 
194,074 

49,155,121 
5,366.677 
275>4«7 
175,580 

37,710,217 

6.177.235 
1,053.054 
140,175 

Total      

36,724,014 

54.972.795 

45,080,681 

Comparing  the  total  income  (Table  40)  and  total  disburse- 
ments (Table  38)  required  under  the  system  of  capitalizing  pensions 
we  find  an  annual  deficit  of  no  small  proportions  for  each  of  the 
threeyears.  In  1904,  it  amounted  to  5, 746,1 06  kronen  ($1,149,221); 
in  1905  to  5,088,213  kronen  ($1,017,643);  and  in  1906107,561,356 
kronen  ($1,512,273).  While  the  amount  of  the  deficit  varies  in 
the  several  districts  with  the  efficiency  of  the  management,  this 
unsatisfactory  financial  condition  is  looked  upon  as  a  fundamental 
weakness  in  the  Austrian  accident  insurance  system.  At  the  close 
of  1906,  the  total  uncovered  liabilities  for  all  institutions  reached 
the  enormous  figure  of  £68,022,280  kronen  ($13,604,456). 

This  state  of  affairs  is  clearly  due  to  the  rates  of  premium 
charged,  which,  in  spite  of  the  several  advances  already  referred 
to,  are  still  too  low  to  set  up  a  sufficient  reserve.  For  several 
years,  the  authorities  have  had  enough  statistical  data  in  their 
possession  to  enable  them  to  fix  adequate  rates,  but  they  have 
been  opposed  in  every  move  by  the  concerted  efforts  of  the  em- 
ployers. As  in  Germany,  the  latter  do  not  see  why  they  should  pay 
vast  sums  in  excess  of  current  requirements  to  maintain  the  cap- 
italized values.  They  do  not  profess,  however,  as  do  the  German 
employers,  to  be  willing  to  cover  deficiencies  as  they  develop, 

130 


AUSTRIA 

but  they  argue  that  the  government  should  make  these  deficien- 
cies good. 

This  policy  of  the  employers  is  clearly  short-sighted,  as 
they  will  later  be  compelled  to  increase  their  rates  heavily  whereas 
they  could  now  do  it  gradually.  Their  attitude,  moreover, 
leads  to  undermining  the  unquestioned  advantages  of  the  "capi- 
talized value"  system;  for  by  maintaining  the  solvency  of  their 
institutions  they  could  obtain  accurate  knowledge  of  the  cost 
of  each  accident,  and  thus  conduct  their  affairs  on  a  much  more 
business-like  basis.  The  cost  of  accident  insurance  would  thus 
be  borne  by  those  who  are  at  the  present  time  responsible  for  the 
accidents  and  not  by  future  members  of  the  institutions.  Table 
41  shows  the  financial  condition  of  the  insurance  institutions  for 
the  years  1904,  1905  and  1906. 


TABLE    41. — ASSETS  AND  LIABILITIES  OF  INSURANCE  ASSOCIATIONS, 

1904-1906 


ASSETS: 

In  stocks  and  bonds 
(including  interest) 
In  realty  . 
In  mortgages  . 
Unpaid  contributions 
Uncovered  deficiencies 


LIABILITIES: 

Reserve  fund  for  survivors   . 

"    for  incapacitated   . 

Pension  fund 

Fund  for  loss  in  exchange     . 
Special  reserve  fund  (railroads  only) 


1904 

(Kronen) 

1905 

(Kronen) 

1906 
(Kronen) 

102,105,190 
5,692,148 
15,097,158 
24,171,662 
55-534-5'2 

1  1  1,861,662 
5,783,670 
15,280,304 

4'.  539-075 
60,460,923 

125,177,667 
6,425,849 
16,587,014 
29,6  1  7,976 
68,022,280 

24,843,897 
172,450,253 

1,903,601 
1,461,767 


27,542,460 

202,939,806 

2,228,080 

1,348,169 

1 18,245 


30,230,1 17 
222,925,043 

2,473.50' 
484,796 

>«5'735 


During  the  year  1906,  8,773  disagreements  arose  which 
together  with  unsettled  claims  of  preceding  years,  made  a  total 
of  10,210  cases.  The  following  table  presents  the  operations 
of  the  courts  of  arbitration. 

There  was  thus  in  1906,  one  appeal  for  about  every  three 
accidents  entitling  the  injured  to  compensation.  While  the 
amount  of  litigation  is  still  very  large,  a  constantly  increasing 
number  of  appeals  are  settled  in  favor  of  workingmen. 

131 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

TABLE   42. — DISPOSITION   OF   CASES    BY    COURTS    OF    ARBITRATION, 

1904-1906 


1904 

1905 

1906 

Actions  discontinued       

5'5 

53' 

7'4 

Cases  dismissed  because  of  lack  of  jurisdiction     .  I           246 

250 

233 

Cases  settled  through  verdict  of  court: 

Rejections        

4.403 

4.1  ii 

4,416 

Requests  granted   

2,831 

3-340 

3733 

Cases  still  pending  at  close  of  year 

1,237 

'.437 

i,i  14 

The  latter  are,  however,  far  from  satisfied  with  the  present 
conditions  and  demand  the  establishment  of  a  final  court  of  ap- 
peals, as  in  the  German  system. 


132 


VI 

INSURANCE  OF   EMPLOYERS    FROM  THE   STAND- 
POINT OF  PUBLIC  POLICY 

IT  was  in    1884,  as  we  have   seen,  that  the  first  obligatory 
insurance    law   based    on    the    principle    of     workmen's 
compensation  was    passed  in    Germany.     Since   then,  the 
progress  of  the  acceptance  of  the  theory  of   workmen's  com- 
pensation for  the  consequences  of  industrial  accidents  through- 
out  the   civilized  world  has  been  remarkable  both  for  its  rapidity 
and  thoroughness. 

Starting  with  the  system  of  compulsory  insurance  in  Ger- 
many, which  was  thoroughly  mutual  in  character  and  for  which 
the  government  accepted  no  responsibility  except  to  supply  the 
compulsion  and  to  supervise  the  management,  the  principle  first 
extended  to  Austria,  where  it  developed  into  a  scheme  in  which 
the  government  took  part  in  the  management  and  assumed  the 
responsibility  of  seeing  that  the  mutual  societies  maintained 
themselves  solvent.  From  Austria,  it  extended  to  Norway 
where  it  became  state  insurance,  monopolizing  the  entire  field. 

Thereupon  came  a  revulsion.  The  movement  had  pro- 
ceeded as  far  in  this  direction  as  it  could,  notwithstanding  the 
evident  advantages  of  the  Norwegian  system  in  economy,  com- 
prehensiveness and  thoroughness.  The  next  countries  to  take 
up  the  subject,  Denmark  and  Great  Britain,  introduced  "work- 
men's compensation"  statutes  into  the  bodies  of  their  laws  with- 
out making  insurance  compulsory.  Denmark,  to  be  sure,  supplied 
a  system  of  state  adjustment  of  losses  which  gave  an  unusually 
large  measure  of  supervision  to  the  state.  Great  Britain  estab- 
lished merely  the  principle,  leaving  its  working  out  to  the  arbit- 
rament of  free  competition. 

A  few  years  later,  Belgium,  Holland,  Finland,  Italy,  Russia, 
France,  and  Spain  followed,  one  after  the  other,  some  of  them 
introducing  state  insurance  merely  as  a  means  of  helping  to  solve 

133 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

the  problem,  and  all  of  them,  with  the  exception  of  Holland  and 
Italy,  leaving  the  matter  whether  an  employer  should  insure  or 
not  to  his  own  discretion.  Last  of  all,  Sweden,  following  Holland, 
introduced  a  system  wherein  it  placed  a  state  institution  in  direct 
and,  so  far,  successful  competition  with  private  companies.  This 
it  did  with  the  evident  intention  of  absorbing  the  entire  business 
and  making  it  a  monopoly  as  in  Norway,  as  soon  as  private^cor- 
porations  had  been  driven  out  by  competition. 

In  all  of  these  countries,  there  is  now  observable  a  strong 
disposition  to  compel  employers  to  insure  and  either  to  foster  the 
establishment  of  a  state  insurance  department  as  a  monopoly 
or  else  to  create  other  obligatory  insurance  institutions,  conducted 
under  the  supervision  of  the  state. 

There  are  adequate  reasons  why  the  evolution  of  workmen's 
compensation  laws  protecting  employers  and  employes  against 
the  consequences  of  industrial  accidents,  should  have  taken 
this  particular  course.  The  revulsion  against  compulsion  and 
state  insurance,  which  began  immediately  after  Norway  had 
made  its  system  a  monopoly,  was  undoubtedly  due  to  the  sus- 
picion of  employers  that  it  might  be  an  opening  wedge  for  the 
state  to  suppress  various  business  activities  and  replace  them  with 
government  monopolies,  on  lines  usually  denominated  "state 
socialism."  This  was  considered  contrary  to  the  recognized 
principles  of  state  or  national  polity,  and  so  far  as  their  influence 
was  concerned,  business  men  and  employers  generally  opposed 
anything  which  looked  to  them  like  "state  socialism."  Now, 
after  the  laws  in  each  of  these  countries  have  been  in  operation 
for  several  years,  it  is  instructive  to  observe  that  the  currents  are 
setting  toward  an  amended  German  system;  namely,  enforcing 
the  obligation  upon  employers,  but  leaving  them  free  to  insure 
in  any  solvent  company,  stock  or  mutual,  or  with  the  state,  if 
the  latter  creates  a  department,  or,  as  proposed  in  Switzerland,  in 
a  state  department  only.  As  yet  no  country  except  Germany  re- 
quires insurance  to  be  in  mutual  associations  of  employers.  It  is 
not  probable,  as  already  mentioned,  that  the  German  system  would 
be  satisfactory  in  countries  which,  like  Norway,  are  neither  large 
enough  nor  sufficiently  developed  industrially  to  enable  such 
mutual  associations  of  various  kinds  to  operate  successfully. 

'34 


VARIOUS    SYSTEMS   OF    INSURANCE 

All  these  systems  are  constantly  being  subjected  to  critical 
and  comprehensive  investigation,  especially  as  to  results  in: 

First,  economy.  In  this  regard,  it  is  not  demonstrated  that 
state  insurance,  even  when  it  is  a  government  monopoly,  is  necess- 
arily more  economically  conducted  than  insurance  in  mutual  or 
stock  companies  supported  by  compulsion  and  under  state  super- 
vision. Compulsion  greatly  reduces  but  does  not  wholly  obviate 
agency  expenses,  when  there  is  free  choice  of  companies.  All 
systems  without  compulsion — with  the  possible  exception  of  the 
state  department  of  Sweden — are  less  economical  and  impose  a 
materially  larger  burden  upon  the  interests  of  the  country,  in  the 
form  of  unnecessary  advertising  and  other  expenses  due  to  com- 
petition for  the  business. 

Second,  efficiency.  This  head  embraces  many  sub-heads; 
but  chief  and  most  important,  from  the  standpoint  of  the  political 
economist  or  statesman,  is  the  question  whether  all  damages  caused 
by  industrial  accidents  are  promptly  and  adequately  compensated. 
Obviously,  all  voluntary  systems  fail  at  this  point;  and  even  when, 
as  in  Italy,  insurance  is  a  compulsory  system  combined  with  free- 
dom of  choice  as  to  the  institution,  it  may  also  be  defeated, 
either  by  inequity  of  adjustment  of  claims  or  failure  of  insurance 
institutions  or  both.  While  the  results  of  such  failure  may  be  pro- 
vided against,  as  in  France,  by  a  government  guarantee  given  in 
consideration  of  a  small  additional  premium,  there  are  manifestly 
many  uncertainties  connected  with  a  voluntary  system.  On  the 
contrary,  state  insurance  carried  on  as  a  monopoly,  and  compul- 
sory insurance  through  associations  of  employers,  or  by  private 
companies  under  government  guarantee,  supply,  when  properly 
conducted  and  supervised,  certainty  of  indemnification  and  free- 
dom from  discrimination  which  make  for  the  greatest  possible 
efficiency. 

Third,  the  encouragement  of  more  comprehensive  protection. 
State  insurance,  conducted  as  a  monopoly,  can  readily  claim  to 
have  been  as  successful  as  compulsory  insurance  subject  to  govern- 
mental supervision,  and  it  has  unquestionably  exceeded  all  volun- 
tary systems  in  this  respect. 

If  certain  other  questions  of  public  policy  are  considered, 
however,  mutual  insurance  associations  under  government  com- 

'35 


INSURANCE    AGAINST    INDUSTRIAL   ACCIDENTS 

pulsion  and  supervision  as  evolved  in  Germany  have  been  more 
successful  than  any  other  system.  It  is  plainly  to  the  advantage 
of  the  state  and  its  citizens  that,  once  the  principle  of  protec- 
tion of  workingmen  against  industrial  accidents  is  introduced,  it 
should  be  extended  as  quickly  as  possible  to  cover  sickness  not 
arising  from  accident,  means  of  cure,  support  to  those  disabled 
through  disease,  and  provision  for  old  age  and  for  dependents 
when  the  workingman  dies  from  whatever  cause.  This,  Germany 
has  accomplished  through  its  comprehensive  system  of  insurance 
not  only  against  accident  but  against  sickness  and  invalidity. 

The  great  development  of  sickness  insurance  societies 
which  give  prompt  attention  with  hospital  treatment  and  imme- 
diate relief  to  the  family,  whether  the  workingman  is  disabled 
by  disease  or  accident,  has  been  from  the  beginning  the  impor- 
tant feature  of  the  German  system,  and  is  a  feature  not  found 
in  anything  like  the  same  perfection  in  any  other  country.  The 
very  existence  in  Germany  of  a  body  of  permanently  disabled 
men  in  receipt  of  an  annuity  granted  as  an  indemnification, 
indicated  the  need  of  providing  benefits  for  permanent  in- 
validity due  to  other  causes.  The  success  of  sickness  insur- 
ance schemes  to  which  employers  and  employes  were  both 
contributing,  suggested  the  desirability  of  developing  a  system 
against  invalidity  on  the  same  lines  of  joint  contribution,  the 
idea  being  that  thereby  it  would  not  become  necessary  to  attempt 
the  almost  impossible  task  of  adding  occupational  diseases  to  the 
list  of  causes  against  which  accident  associations  insure.  In- 
surance against  invalidity  or  total  disability,  and  old  age,  which 
have  grown  to  enormous  proportions  in  Germany,  were  therefore 
a  direct  outgrowth  of  the  system  of  mutual  associations  of 
employers,  under  state  compulsion  and  supervision. 

Fourth,  prevention.  It  must  be  conceded  that  the  num- 
ber of  accidents  has  not  been  greatly  reduced  as  the  result 
of  insurance  in  stock  companies.  It  is  true,  however,  that 
as  this  system  develops  and  competition  becomes  more  severe, 
concessions  in  rates  are  given  to  certain  establishments  which 
make  a  record  for  low  loss  ratios  because  they  employ  exhaustive 
means  of  prevention.  The  stock  company  has  been  satisfied 
to  fix  its  rates  at  a  point  where  it  can  make  money,  and  as  a 

136 


VARIOUS    SYSTEMS   OF    INSURANCE 

rule  has  no  further  interest.  Moreover,  if  it  were  to  bestir 
itself  about  prevention,  its  activity  in  many  cases  would  be 
misunderstood,  as  it  would  be  regarded  as  an  unwarranted  in- 
trusion and  therefore  resented  instead  of  welcomed. 

Mutual  associations,  even  where  there  is  no  compulsion 
to  insure,  have  often  done  good  work  in  the  direction  of  pre- 
vention. This  is  particularly  true  when  societies,  contributed 
to  either  by  employes  or  otherwise,  have  been  organized  in  con- 
nection with  only  one  industry,  a  few  related  industries,  or  at 
most  a  limited  number  of  precisely  the  same  character,  with 
a  view  to  reducing  losses,  and  thus,  the  cost.  In  some  cases, 
such  an  association  has  been  of  great  utility  in  the  matter  of 
prevention,  the  intelligent  caution  of  one  or  more  of  the  em- 
ployers extending  throughout  the  membership.  Some  mutual 
societies,  however,  have  made  but  little  progress  in  this  regard 
or  have  scarcely  attempted  to  enter  the  field. 

In  Denmark,  where  insurance  is  entirely  in  private  com- 
panies and  associations,  the  state,  through  its  monopoly  of 
the  adjustment  of  claims  for  compensation,  has  supplied  itself 
with  statistics  and  intimate  knowledge  concerning  the  conse- 
quences of  this  or  that  neglect  of  proper  precaution  to  protect 
life  and  vigor.  The  result  has  been  an  appreciable  increase  in  the 
matter  of  prevention,  which  is  reflected  in  the  rates  of  premium. 
Mutual  associations  of  employers  have  availed  themselves  also 
of  preventive  devices  to  a  large  degree  in  order  to  reduce  the 
cost  of  insurance.  Stock  companies,  likewise,  have  been  thoroughly 
alive  to  the  value  of  the  work  of  the  state  and  have  utilized  the 
published  statistics  in  fixing  competitive  rates  of  premiums. 

In  Italy,  the  department  of  prevention  is  almost  wholly  in 
private  hands.  As  a  substitute  for  the  certificate  of  its  own 
factory  inspectors,  the  government  accepts  that  of  an  association 
of  employers  which  extends  over  the  country  and  undertakes  to 
introduce  the  most  adequate  means  of  prevention.  By  co- 
operation with  the  central  mutual  association  of  employers, 
conducted  under  the  supervision  of  the  state  and  in  which  all 
employers  who  do  not  insure  elsewhere  must  be  insured,  much 
has  been  done  in  recent  years  to  cause  the  adoption  of  safety 
appliances  and  improvements. 

137 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

Where  state  insurance  is  carried  on  in  competition  with 
private  companies,  both  stock  and  mutual,  and  even  where 
it  has  had  some  measure  of  success,  little  has  been  done  in  the 
matter  of  prevention.  Undoubtedly,  the  calculation  of  adequate 
premium  rates  by  the  Swedish  insurance  department,  mainte- 
nance of  sufficient  reserves  and  the  like,  are  affording  encourage- 
ment in  that  country  to  the  movement  in  favor  of  safety  appli- 
ances; but  under  the  rigor  of  a  competitive  system,  with  the 
necessity  to  please  the  employer  in  order  to  get  his  patronage, 
the  department  cannot  exercise  much  influence  in  this  direction. 
Yet,  aside  from  the  mere  pressure  of  discrimination  in  rates, 
not  much  has  been  accomplished  in  Norway,  where  state  in- 
surance is  a  government  monopoly,  with  nothing  to  fear  from 
private  competition.  Co-operation  with  the  government  depart- 
ment of  inspection  has  not  been  effectual  in  penalizing  the  absence 
of  safety  devices,  nor  has  it  caused  them  to  be  introduced, 
either  through  rigid  classification  or  by  direct  interference  of  the 
state.  On  the  contrary,  a  more  or  less  controlling  disposition 
exists  in  one  state  department  not  to  interfere  with  another, 
however  closely  related  to  it.  It  thus  seems  improbable  that 
there  will  be  great  effectiveness  in  the  matter  of  prevention 
in  state  insurance  departments,  operated  as  monopolies  or 
in  competition  with  private  companies,  until  factory  inspection 
is  united  with  the  other  functions  of  such  a  department. 
Whether  this  would  otherwise  be  a  good  thing  or  not  will  not  be 
here  discussed.  In  view  of  the  jealousy  of  other  co-ordinate 
state  departments,  their  co-operation  would  be  likely  to  be  feeble 
and  occasional. 

On  the  other  hand,  in  Germany,  where  insurance  against 
the  consequences  of  industrial  accidents  is  entrusted  to  mutual 
associations  of  employers  under  the  compulsion  and  supervision 
of  the  government,  there  is  the  greatest  possible  incentive  to 
enforce  effectual  means  of  prevention.  Employers  cannot  escape 
insuring  in  these  associations.  They  have  no  appeal  to  the  gov- 
ernment and  political  influence  would  be  of  no  avail.  For  an 
employer  to  escape  high  rates,  others  of  the  same  class  must  be 
convinced  that  the  statistics  of  their  common  association,  relative 
to  losses  in  the  given  establishment  due  to  certain  defects  of  me- 

138 


VARIOUS    SYSTEMS   OF    INSURANCE 

chanical  equipment,  are  incorrect.  Failing  this,  the  individual 
establishment  must  equip  itself  with  the  latest  and  best  safety 
appliances,  or  take  the  consequences  in  enhanced  rates  of  pre- 
miums. The  sympathy  of  other  employers  cannot  be  enlisted  for 
the  reason  that  their  interests  are  adverse  to  those  of  the  delin- 
quent member.  Each  is  anxious  that  he  should  not  be  burdened 
with  additional  premiums  to  make  up  for  deficiencies  in  other 
employers'  plants. 

In  addition,  these  associations  are  able  to  enforce  rules, 
not  merely  for  the  installation  and  maintenance  of  proper  ma- 
chinery, but  for  superintendence  and  the  conduct  of  employes. 
An  interesting  illustration  of  this  is  the  rule  in  the  metal  worker's 
trade  that  employes  must  not  wear  their  trousers  inside  their 
boot  tops,  so  that  in  cases  of  accident  the  molten  metal 
may  run  down  the  outside  instead  of  down  the  inside.  A  cardinal 
rule  of  virtually  all  these  employers'  associations  is  that,  when- 
ever a  new  plant  is  constructed  or  a  new  machine  installed,  it 
must  have  all  the  latest  and  most  approved  safety  appliances. 
These  insurance  associations  may  look  with  more  or  less  in- 
dulgence at  the  continuation  of  a  plant  or  machine,  with  such 
improvements  as  may  be  absolutely  necessary,  without  requir- 
ing it  to  be  rebuilt  in  order  to  introduce  the  latest;  they  ex- 
hibit no  such  patience  as  regards  the  installation  of  a  new 
plant  or  machine. 

In  Austria,  where  accident  insurance  associations  are 
organized  by  districts  instead  of  by  classes  of  business  and  the 
management  is  bureaucratic  instead  of  representative,  the  influ- 
ence upon  prevention  is  much  less. 

While  all  the  foregoing  considerations  are  important,  and 
while  it  appears  from  the  above  review  that  the  German  sys- 
tem of  mutual  associations  of  employers  has  done  the  best  work, 
there  is  another  consideration  of  even  greater  importance; 
namely,  the  effect,  if  any,  which  this  form  of  insurance  has  had 
upon  the  efficiency  of  human  labor. 

A  priori,  it  is  supposed  by  many  that  all  of  these  aids 
render  workingmen  less  efficient.  This  theory  is  based  upon  the 
argument  that  workingmen  are  less  independent  when  freed  from 
the  necessity  to  work  hard,  continuously  and  even  anxiously. 

139 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

It  is  urged  that  everything  done  to  make  a  man  feel  that 
he  or  his  family  can  or  will  be  taken  care  of  without  cost  to 
himself,  breaks  down  his  self-respect  and  removes  the  greatest 
known  incentive  to  unremitting  labor.  To  this,  before  the  ex- 
periment had  been  tried,  the  reply  might  have  been  made,  that 
provision  for  the  maintenance  of  the  victims  of  our  modern 
industrial  system  would  have  no  influence  upon  those  not  victims, 
except  to  encourage  them,  and  to  remove  the  dread  of  misfortune 
not  caused  by  one's  own  misconduct  which  confuses  and  prevents 
a  man  seeing  clearly  that  success  is  due  to  effort  and  failure  to 
want  of  effort. 

It  is  not  now  necessary,  however,  to  meet  these  a  priori 
arguments  with  such  reasoning.  The  experience  of  the  last 
quarter  century  has  proved  conclusively  that  the  point  of  view 
is  wrong.  The  system,  which  has  been  vigorously  denounced  as 
"state  socialism"  and  "paternalism,"  has  given  no  such  result. 
In  those  countries,  particularly  in  Germany,  in  which  this  sys- 
tem of  social  justice  has  reached  the  greatest  development, 
labor  has  become  the  most  efficient.  This  fact  has  recently  been 
recognized  even  in  Great  Britain,  which  for  many  years  had  failed 
to  appreciate  it.  It  is  not  possible  to  deny  that,  under  the  skil- 
ful direction  which  within  the  last  quarter  of  a  century  has 
marked  the  development  of  German  industries,  the  labor  of  the 
average  workingman  has  become  more  and  more  effective  every 
year,  not  merely  absolutely  but  in  comparison  with  that  of 
other  countries.  This  has  been  reflected  in  that  nation's  success 
in  competition  for  the  world's  trade.  The  result  is  readily  seen 
when  one  visits  Germany  and  particularly  German  factories. 
They  are  "cleaned  up,"  there  is  no  waste  and  refuse  lying  about. 
To  borrow  a  metaphor:  The  country,  as  represented  by  its 
factories  and  mills,  is  "well  groomed."  Everything  is  systematic 
and  thorough;  theory  and  experience  work  together  as  guides 
of  the  management.,  highly  developed  means  and  methods  being 
employed  to  prevent  accidents  and  safeguard  workmen.  The 
effect  on  the  observer  becomes  more  pronounced  in  visiting  other 
countries  where  conditions  similar  to  those  found  in  so  many 
places  in  the  United  States  still  prevail. 

Undoubtedly,  the  growing  sentiment  among  German  work- 

140 


VARIOUS    SYSTEMS    OF    INSURANCE 

ingmen  that  they,  with  their  families,  cannot  be  destroyed  by 
misfortunes  not  due  to  their  own  misconduct,  has  had  much  to 
do  with  bringing  about  the  above  result.  It  is  acknowledged 
that  the  task  is  by  no  means  complete,  but  an  enormous  improve- 
ment has  been  accomplished  now  that  the  average  workingman 
knows  that  neither  accident  nor  disease  can  ruin  him  and  that 
his  death  or  permanent  disability  cannot  pauperize  his  family. 
The  antithesis  of  this  is  shown  in  our  own  country  where  working- 
men  and  their  families  are  often  transformed  into  tramps  and 
paupers  by  the  consequences  of  industrial  accidents. 

Thus  far,  the  picture  just  shown  of  workingmen's  insur- 
ance, as  typified  by  mutual  trade  associations,  has  been  a  pleasant 
and  inspiring  one.  There  is,  however,  another  side  to  the  pic- 
ture which  should  be  accentuated  here,  in  view  of  possible  changes 
in  legislation  in  the  various  states  of  the  Union,  particularly  in 
view  of  the  fact  that  commissions  have  been  appointed  to  present 
working  plans  for  the  consideration  of  several  state  legislatures. 

First  of  all,  it  must  be  understood  that  the  principle  of 
compulsion,  or  to  use  a  better  and  more  expressive  term,  the 
principle  of  obligation,  has  been  universally  accepted  in  Germany. 
That  this  should  be  the  case  with  the  authorities  was  assured. 
Bismarck  and  official  Germany  introduced  the  present  legislation 
and  have  advanced  and  fostered  it  in  the  face  of  opposition  and 
dissatisfaction  for  thirty  years.  In  the  beginning,  the  attitude  of 
the  German  employer  was  one  of  forced  resignation.  Today  he 
admits,  and  in  most  quarters,  even  claims,  that  the  burden  of  cost 
laid  upon  him  is  just  and  one  that  industry  should  bear.  No  more 
significant  illustration  of  this  could  be  given  than  the  demonstra- 
tion made  in  1908  at  the  Congress  on  Workingmen's  Insurance 
at  Rome.  An  employer  of  labor  of  the  old  school,  an  insur- 
gent against  the  existing  order,  voiced  a  tearful  protest  against 
the  drain  made  on  the  profits  of  industry  and  vehemently 
decried  any  possibility  of  further  extension  of  compulsory  insur- 
ance as  giving  the  death  blow  to  German  industrial  develop- 
ment. His  remarks  were  received  with  laughter  and  ridicule, 
not  only  by  delegates  from  other  nations,  but  by  his  own  col- 
leagues. In  Germany  itself,  not  only  individual  employers,  but 
representatives  of  trade  associations  and  even  officials  of  feder- 

141 


INSURANCE   AGAINST   INDUSTRIAL   ACCIDENTS 

ations  of  mutual  trade  associations,  expressed  themselves  as  sat- 
isfied with  the  theory  of  the  law  as  enunciated,  and  advocated  its 
extension  to  other  groups. 

Workingmen  likewise  are  satisfied  with  the  underlying  prin- 
ciple of  this  class  of  social  legislation.  It  is  well  understood  that 
Bismarck's  primary  idea  in  foisting  this  legislation  on  the  German 
people,  was  to  offset  the  so-called  machinations  of  the  Social 
Democrats.  From  one  point  of  view  he  was  successful.  Rep- 
resentatives of  social  democracy  not  only  admit  the  value  of  the 
present  system,  but  laud  it  openly,  and  demand  even  more  radical 
and  revolutionary  additions  and  amendments.  Herr  Simonosky, 
leader  of  the  Social  Democrats  in  Berlin,  himself  a  stone  mason 
and  representative  of  the  workingmen  in  the  central  council  of 
the  sickness  insurance  associations,  declared  that  600,000  work- 
ingmen in  Berlin  were  in  favor  of  the  law,  and  the  only  criticisms 
they  had  to  make  were  that  the  associations  were  prevented  from 
using  their  funds  for  certain  specific  preventive  purposes;  that 
workingmen  were  not  represented  on  boards  or  committees  mak- 
ing awards  in  the  first  instance  under  the  accident  law;  and  fi- 
nally, that  compensation  under  the  invalidity  and  old  age  law 
was  pitifully  small. 

The  second  criticism  may  be  considered  first,  since  it  brings 
out  the  fundamental  weakness  of  mutual  trade  associations. 
Whatever  these  organizations  may  be  from  the  standpoint  of 
efficiency  and  prevention,  from  that  of  German  workingmen 
they  are  associations  of  employers,  in  which  the  employe  has  no 
voice.  It  follows  that  there  are  many  appeals  from  the  de- 
cisions of  employers  to  higher  tribunals,  such  being  permitted 
without  cost  to  injured  workmen,  and  even  from  these  tribunals 
in  which  both  employers  and  employes  are  represented  many 
appeals  are  taken  to  the  highest  court,  the  Imperial  Insurance 
Office.  If  the  expense  of  this  litigation  and  appeal  now 
borne  by  the  government,  were  to  be  included  in  the  management 
costs  of  the  mutual  trade  associations,  the  percentage  would  be 
considerably  higher  than  the  8  to  12  per  cent  now  required  for 
their  administration. 

Furthermore,  there  can  be  little  doubt  that  the  present  sys- 
tem leads  to  simulation,  particularly  of  partial  permanent  inca- 

142 


VARIOUS    SYSTEMS   OF    INSURANCE 

pacity.  As  shown  in  another  place,  the  cost  of  the  earlier  weeks 
of  sickness  or  invalidity  due  to  accident  is  borne  in  part  by  the 
employe;  the  latter  weeks  are  entirely  at  the  cost  of  the  employer. 
An  employe,  after  13  weeks  of  sickness  resulting  from  acci- 
dent, has  nothing  to  lose  and  everything  to  gain  if  he  can  make 
the  mutual  trade  association  pay  all  "that  the  traffic  will  bear." 
Even  in  sickness  societies,  when  the  employe  contributes  the 
greater  part  of  the  cost,  a  considerable  amount  of  such  malinger- 
ing is  ever  present.  It  is  not  surprising,  therefore,  that  it  should 
prevail  to  a  larger  degree  under  the  accident  law,  where  the 
burden  is  assessed  on  the  employer. 

It  has  been  repeatedly  stated  that  nowhere  has  preven- 
tion of  accidents  reached  so  high  a  plane  of  development  as 
in  Germany  under  these  compulsory  mutual  trade  associations. 
And  yet  this  can  be  attributed  only  in  part  to  legislation  itself. 
Some  of  the  success  belongs  to  German  enterprise,  thrift  and 
character.  In  Austria,  where  the  mutual  associations  are  on 
territorial  instead  of  on  trade  lines,  the  development  of  preven- 
tive measures  and  introduction  of  safety  devices  nowhere  ap- 
proaches the  degree  of  perfection  attained  in  Germany.  This 
failure  is  ascribed  to  bureaucratic  management.  In  fact,  neither 
through  the  mutual  associations  nor  government  factory  in- 
spection has  prevention  progressed  in  Austria  as  it  should.  For 
this  reason,  there  is  much  food  for  thought  in  regard  to  the  pre- 
vention of  accidents  in  the  results  obtained  through  the  Federa- 
tion of  Sickness  Insurance  Societies  in  Vienna.  Aside  from  the 
fact  that  sickness  insurance  is  obligatory  in  Austria,  these  soci- 
eties are  in  no  sense  government  agencies.  Having  accepted 
the  doctrine  of  obligatory  insurance,  Viennese  workingmen  of  all 
shades  of  belief,  race  and  prejudices,  have  voluntarily  formed 
a  federation  of  their  respective  sickness  societies,  an  entirely 
extra-official  body,  through  which  medical  service  is  given  to  the 
entire  membership,  individual  sickness  societies  contenting  them- 
selves with  collecting  dues  and  paying  sickness  benefits. 

This  federation  in  Vienna  is  teaching  a  wonderful  lesson 
in  the  prevention  of  accidents.  Without  compulsion  of  law, 
it  is  carefully  tabulating  its  sickness  experience,  not  only  in 
respect  to  workingmen,  but  to  employers  as  well.  By  its  well 


INSURANCE    AGAINST   INDUSTRIAL   ACCIDENTS 

kept  system  of  records,  it  is  showing  the  employer  through  ways 
he  would  probably  not  utilize  himself,  and  which  no  system 
of  factory  inspection  could  equal,  precisely  the  number  of  cases 
of  sickness  due  to  accidents  occurring  in  his  establishment  as  a 
result  of  defective  machinery,  absence  of  safety  devices,  etc. 
The  moral  pressure  of  the  federation  is  thus  being  brought  to  bear 
on  the  employer  to  induce  him  to  remedy  evil  conditions  in  his 
industry  and  not  only  to  minimize  accidents  but  to  improve 
the  surroundings  of  the  workmen  from  a  hygienic  and  sanitary 
standpoint. 

It  is  significant  that  Switzerland,  in  its  recent  attempt 
at  accident  insurance  legislation,  has  discarded  the  German  sys- 
tem. The  Swiss  are  not  novices  at  workingmen's  insurance. 
The  subject  has  been  under  consideration  for  thirty  years  and  its 
legislators  and  officials  have  carefully  studied  every  form  of 
insurance  in  Europe.  Yet,  if  the  Senate  passes  the  bill  which 
has  already  been  adopted  by  the  lower  house  of  parliament, 
Switzerland  will  not  have  mutual  trade  associations,  but  a  monop- 
olistic state  department  administering  the  accident  insurance 
law  through  cantonal  and  local  sickness  societies.  This  may  be 
due,  however,  as  in  Norway,  to  the  fact  that  the  nation  is 
small  and  the  creation  of  mutual  associations  of  employers  of  the 
same  class  impracticable. 


144 


INSURANCE  AGAINST  SICKNESS  AND  DEATH 


10  F 


VII 
SICKNESS  INSURANCE 

EVEN  before  any  laws  were  passed  in  European  countries, 
establishing  the  liability  of  employers  for  compensation 
for  the   consequences    of    industrial     accidents,    mutual 
sickness  insurance  societies  were  to  be  found  practically  every- 
where.   These  were  of  several  types: 

(1)  Private  mutual  societies  composed  of  persons  of  vari- 
ous occupations.    These  societies  were  usually  local  with  small 
memberships. 

(2)  Large   federated   or   affiliated   societies,   composed   of 
local  bodies  and  usually  operated  on  the  lodge  system. 

(3)  Establishment  societies  attached  to  an  industrial  estab- 
lishment or  business  and  frequently  supported  in  part  by  the  em- 
ployer.     Membership   in   some  of  these  was   required  by  the 
employer;  while  in  others  it  was  voluntary  but  encouraged. 

(4)  Trade  unions  which  furnished  insurance  against  sick- 
ness as  a  part  of  their  benefits. 

The  function  and  management  of  local  societies  differed 
according  to  locality.  In  France  far  more  attention  was  paid  to 
the  collection  of  funds  for  annuities  than  to  sickness  insurance. 
Not  infrequently  only  old  age  or  annuity  benefits  were  given. 
When  the  Belgian  government,  in  order  to  encourage  thrift, 
offered  annuities  at  less  than  usual  rates  on  convenient  weekly  or 
monthly  payments  if  taken  through  such  mutual  societies,  the 
latter  were  organized  frequently  for  no  purpose  whatever  except 
to  collect  the  money  to  pay  for  annuities.  In  other  countries, 
great,  and  frequently  the  only,  emphasis  was  placed  upon  sick- 
ness insurance.  The  usual  form  taken  by  such  insurance,  when 
offered  by  small  local  societies,  was  the  furnishing  of  benefits  for 
a  limited  time  in  event  of  illness.  These  benefits  usually  con- 

'47 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

sisted  of:  (i)  medical  attendance  and  medicines;  (2)  hospital 
treatment,  if  required;  (3)  a  cash  payment  per  week,  either  of  a 
definite  amount  or,  in  establishment  societies,  of  a  percentage 
of  the  wages;  (4)  medical  attendance  and,  less  frequently,  small 
cash  benefits  in  event  of  the  illness  of  the  wife  of  a  member  or 
his  children;  (5)  a  benefit  of  a  lump  sum,  such  as  three  or  four 
weeks'  sick  pay,  for  each  confinement  of  the  wife. 

Ordinarily  no  attempt  was  made  to  discriminate  in  rates 
between  members  of  different  ages  or  occupations.  In  some 
organizations  the  more  dangerous  industries  were  excluded  en- 
tirely and  occasionally  benefits  ceased  under  the  terms  of  the 
by-laws  when  the  member  attained  a  certain  age.  Usually,  after 
a  member  was  admitted,  he  had  the  right  to  renew  his  member- 
ship as  long  as  he  pleased,  the  society  not  being  at  liberty  to 
refuse  his  premium. 

With  rare  exceptions  these  societies  have  not  attempted 
to  maintain  solvency  by  accumulating  sufficient  reserves  to 
make  it  certain  that  their  rates  of  premiums  will  enable  them 
permanently  to  meet  claims.  Risk  of  disability  due  to  sickness 
is  normally  an  increasing  one,  accompanying,  though  not  neces- 
sarily in  a  proportionate  degree,  the  increase  in  the  death 
rate.  An  increasing  rate  has  also  been  found  to  apply,  though 
not  in  so  marked  a  degree,  to  disability  caused  by  accident. 
Obviously,  an  increasing  hazard  when  covered  by  level  con- 
tributions or  premiums  calls  for  an  accumulation  of  funds  in 
order  to  supplement  premiums  and  enable  the  society  to  pay 
claims.  The  necessity  for  such  an  accumulation  has  not  usually 
been  recognized  by  private  sickness  societies.  There  are,  how- 
ever, exceptions  to  this  rule.  Some  of  the  larger  so-called  "cen- 
tralized societies"  of  England,  such  as  the  Hearts  of  Oak,  of 
London,  which  grew  out  of  small  private  societies,  have  observed 
actuarial  principles,  so  that  their  solvency  is  assured. 

Federated  or  affiliated  societies  with  their  branches  were 
a  natural  development  from  local  sickness  societies.  They 
originally  came  into  existence  through  the  organization  of  one 
society  after  another  based  upon  the  model  of  some  body  which 
had  been  especially  successful.  Community  of  interests  sooner 
or  later  brought  about  conferences,  and  these,  in  turn,  a  loose 

148 


SICKNESS    INSURANCE 

system  of  federation,  which  in  some  cases  became  permanent  and 
binding.  There  was  also  at  hand  a  prototype  for  such  organiza- 
tions in  the  masonic  and  other  lodges,  with  their  local  branches; 
and  the  introduction  of  a  lodge  system  with  initiations  and  rituals, 
soon  distinguished  these  federated  societies  in  a  marked  degree 
from  purely  local  organizations. 

In  most  cases,  affiliated  associations  have  been,  so  far  as 
sickness  insurance  benefits  are  concerned,  nothing  but  a  federa- 
tion of  small  local  sickness  insurance  societies.  It  was  found  by 
experiment  that  wherever  funds  were  dealt  with  by  the  general 
society  there  were  two  unfavorable  consequences:  (i)  that  the 
influence  of  local  branches  was  pretty  likely  to  be  thrown  in 
favor  of  payment  of  benefits  to  a  member  of  that  branch,  no 
matter  how  plain  simulation  might  be;  and  (2)  that  great 
jealousy  arose  between  branches  lest  one  should  pay  more, 
and  another  less  than  the  benefits  which  its  members  respectively 
received. 

Whatever  may  have  been  the  advantage  of  leaving  each 
branch  to  receive  the  contributions  of  its  own  members,  to  pay 
its  own  expenses  and  sickness  claims  and  maintain  its  own  re- 
serves, the  separate  lodge  system  certainly  suffered  and  still 
suffers  under  the  serious  disadvantage  that  it  is  not  possible 
for  the  entire  affiliated  society  to  maintain  itself  completely 
solvent.  Some  of  the  local  bodies  inevitably  exhibit  deficiencies 
which  are  not  offset  by  surpluses  of  other  branches,  since  these  are 
not  applicable  to  the  payment  of  claims  against  the  embarrassed 
branches.  The  net  result,  therefore,  is  that  most  of  these  affiliated 
societies  have  likewise  failed  to  accumulate  reserves  necessary 
to  solvency.  In  their  case  this  is  a  more  serious  matter  than  in 
that  of  purely  local  societies,  as  most  of  the  former  have  under- 
taken to  supply  not  merely  temporary,  but  permanent  disability 
benefits,  payable  as  long  as  disability  continues,  and  old  age 
benefits  as  well. 

When  it  is  taken  into  account  that  in  a  voluntary  society 
payment  of  benefits  during  permanent  disability  and  old  age 
requires  the  society  to  have  in  hand,  when  such  payment 
begins,  a  sum  of  money  equal  to  the  present  value  of  benefits 
thereafter  to  be  paid,  it  is  clear  that  neglect  to  do  so  on 

149 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

the  part  of  such  a  society  is  an  exceedingly  serious  matter,  and 
that,  in  the  hands  of  ignorant  or  careless  men,  the  result  is  pretty 
certain  to  be  disastrous. 

Notwithstanding  these  defects,  these  federated  or  affiliated 
societies  have  in  several  cases  grown  to  an  enormous  size.  This 
is  particularly  true  in  Great  Britain,  where  the  Manchester 
Unity  of  Odd  Fellows  and  the  Ancient  Order  of  Foresters  have 
each  in  the  neighborhood  of  one  million  members,  distributed 
among  a  very  large  number  of  lodges.  These  two  societies  pay 
temporary  and  permanent  benefits  and  supply  life  insurance  as 
well  as  sickness  insurance.  Both  have,  made  earnest  efforts  to 
introduce  adequate  rates  and  to  bring  their  local  branches  into 
a  satisfactory  financial  condition.  Both  have  caused  their  local 
branches  to  accumulate  in  the  aggregate  assets  running  into 
millions  of  pounds.  But  the  Ancient  Order  of  Foresters  is  still 
far  short  of  solvency,  even  setting  the  surpluses  of  some  lodges 
against  the  deficits  of  others;  and  the  Manchester  Unity  of  Odd 
Fellows  has  barely  succeeded  in  arriving,  on  the  whole,  at  a 
condition  of  solvency,  tested  in  the  same  manner.  .  This,  it  is 
proper  again  to  note,  does  not  mean  that  each  of  the  local  branches 
is  solvent;  but  merely  (i)  that  a  majority  of  the  branches  are  in 
a  state  of  solvency,  and  (2)  that  if  the  surplus  in  those  branches 
could  be  and  were  applied  to  assist  the  branches  which  exhibit  a 
deficiency,  it  would  put  them  upon  a  solvent  basis. 

Trade  unions  are  in  effect  affiliated  societies.  They  differ, 
however,  from  other  affiliated  societies  in  the  following  par- 
ticulars: 

(1)  The  members  are  all  of  the  same  general  occupation 
and  have  a  strong  incentive  to  become  and  to  remain  members 
without  regard  to  sickness  benefits,  though  it  has  been  found 
that  to  supply  these  is  decidedly  an  additional  attraction. 

(2)  Though    sickness    benefits    are    sometimes    paid    out 
of  local  trade-union  treasuries,  it  is  not  uncommon   for   them 
to  be  met  out  of  the  general  treasury.     In  any  event,  rates  are 
usually  fixed   by  the  central   organization   and  local   branches 
have  no  choice  in  the  matter. 

(3)  Usually,    trade   unions   do   not    supply   life   insurance 
as  well  as  sickness  insurance,  though  sometimes  they  pay  a  bene- 

150 


SICKNESS    INSURANCE 

fit  in  case  of  death  by  accident  or  even  a  small  funeral  benefit  in 
event  of  death  from  any  cause. 

(4)  Unlike  the  local,  private  societies  and  affiliated  organ- 
izations, trade  unions  usually  supply  unemployment  or  out-of- 
work  insurance  which,  however,  as  will  be  seen  hereafter,  is 
invariably  complicated  with  "strike  benefits"  paid  the  members 
while  on  strike. 

It  is  not  too  much  to  say  that  almost  invariably  trade 
unions  neglect  to  provide  for  solvency.  They  do  not  fix  their 
rates  with  direct  reference  to  the  increasing  risk  which  comes 
with  increasing  age,  nor  do  they  attempt  to  maintain  reserves  on 
an  adequate  basis,  such*  as  will  assure  the  payment  of  their 
claims  permanently.  Compared  with  private  local  societies, 
and  even  with  ordinary  affiliated  societies,  trade  unions  have 
one  advantage  which  goes  a  good  way  toward  supplying  the 
place  of  adequate  reserves.  So  long  as  they  are  successful  in 
obtaining  shorter  hours  and  better  wages  for  their  members, 
there  is  the  strongest  possible  incentive  for  young  and  healthy 
workmen  to  join,  irrespective  of  whether  sickness  insurance 
costs  a  little  more  or  a  little  less  than  elsewhere.  The  result 
has  been  that  an  average  sickness  rate  may  be  maintained  for 
a  considerable  time,  and  if  other  conditions  should  be  constantly 
favorable  it  is  not  inconceivable  that  these  averages  could  be 
maintained  permanently. 

Under  such  a  system,  the  older  members  who  are  paying 
less  than  their  protection  against  sickness  fairly  costs  are  helped 
out  by  the  over-payments  of  younger  members,  which,  instead 
of  going  into  the  reserve,  are  applied  toward  meeting  the 
claims  of  their  elders.  This  system  will  work  if  there  is  abso- 
lute assurance  that  men  will  continue  to  come  in.  When  the 
trade  union's  ability  to  secure  improved  labor  conditions  be- 
comes weakened,  the  younger  men  drop  out,  precisely  as  in  other 
societies. 

One  class  of  associations  remains  to  be  considered;  namely, 
establishment  societies,  or  sickness  insurance  funds.  The  dis- 
tinguishing feature  of  these  societies  is  that  membership  in  each 
is  confined  to  employes  of  a  particular  establishment,  and  it  is 
usual  for  employers  also  to  contribute.  It  is  conceivable  that 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

such  a  body  may  differ  in  no  essentials  from  a  private,  local 
society,  and  that  it  may  be  organized  among  employes  of  an  estab- 
lishment entirely  of  their  own  free  will,  and  operate  with  no 
other  advantage  than  that  co-workers  prefer  to  join  it  rather  than 
some  other  society. 

In  nearly  all  cases,  however,  these  societies  have  been 
founded  with  the  help  of  the  employer  as  the  result  of  motives 
ranging  all  the  way  from  the  most  altruistic  to  the  most  selfish. 
One  employer  may  desire  to  confer  great  benefits  upon  his  work- 
men and  accordingly  make  large  contributions  to  the  funds.  He 
may  pay  the  expenses  of  management,  make  collections  by  de- 
ducting dues  from  wages,  guarantee  a  larger  rate  of  interest  on 
the  funds  than  they  actually  earn,  and  give  special  benefits  out 
of  his  own  pocket.  On  the  other  hand,  another  employer  may 
have  organized  such  a  fund  with  the  sordid  purpose  of  "con- 
tracting out"  his  liability  under  the  law,  at  the  same  time  re- 
quiring the  workmen  to  pay  contributions  sufficient  to  cover  all 
benefits. 

Examples  of  both  of  these  types  were  not  unknown  in 
different  parts  of  Europe  before  the  recent  workmen's  compen- 
sation statutes  were  enacted;  and  they  are  not  unknown  in  the 
United  States  today. 

These  establishment  societies  have  usually  differed  from 
other  sickness  insurance  societies  in  at  least  one  point;  namely, 
that  membership  in  them  is  either  in  fact  or  in  effect  obligatory. 
Even  though  the  employer  does  not  in  set  terms  require  each 
employe  to  be  a  member,  it  is  usually  well  understood  that  pref- 
erence when  he  is  reducing  his  force,  for  instance,  will  be  given 
to  those  who  are  members;  thus  it  is  to  every  employe's  interest  to 
join.  This  procedure  has  the  effect  of  constantly  replenishing  the 
ranks  with  young  workmen,  so  that  the  maintenance  of  an  average 
age  and  an  average  death  rate,  when  the  number  of  members  is 
reasonably  large,  is  not  impossible.  This  in  turn,  brings  about 
the  same  condition  already  described  under  the  head  of  trade 
unions, — that  the  over-payments  of  the  younger  members  instead 
of  going  into  reserves  are  directly  applied  to  supplement  the  dues 
of  their  seniors.  As  the  influx  of  new  material  is  reasonably 
constant,  those  who  have  thus  over-paid  in  the  earlier  years 

152 


SICKNESS    INSURANCE 

are  in  turn  helped  out  later  by  similar  over-payments  of  future 
members. 

It  has  not  been  easy  in  all  cases,  however,  for  employers  to 
maintain  these  funds,  even  with  compulsion.  Compulsion  has  often 
been  regarded  as  a  grievance.  Duplication  of  benefits  may  occur  if 
the  workmen  of  an  establishment  belong  also  to  their  respective 
trade  unions.  As  has  been  said,  there  is  abundant  reason  for  believ- 
ing that  some  employers  have  endeavored  to  utilize  these  funds  or 
societies  as  a  means  of  weaning  workmen  from  their  trade  unions, 
thus  causing  the  funds  to  be  made  the  particular  object  of  attack 
by  the  unions.  It  is  also  claimed  that  a  fund  interferes  with  the 
mobility  of  labor,  and  that  many  wage-earners  are  tied  down  to 
particular  industries  since  change  of  position  carries  with  it  a  com- 
plete loss  of  accumulated  benefits.  These  charges  have  resulted 
in  battles  being  fought  over  the  continuation  of  certain  estab- 
lishment funds.  If  the  trade  unions  succeeded,  the  obligatory 
nature  of  the  membership  in  the  fund  was  abandoned.  Some- 
times the  entire  scheme  had  to  be  given  up;  or  if  it  was  con- 
tinued with  voluntary  membership  the  constant  influx  of  young 
and  vigorous  members  as  a  substitute  for  adequate  reserves  was 
no  longer  to  be  counted  upon. 

Many  employers  believe  that  these  societies  ought  to  be 
maintained  in  a  condition  of  complete  solvency.  This  opinion 
is  recognized  in  the  laws  of  Great  Britain,  which  provide  that  a  so- 
ciety will  be  certified  by  the  government  as  furnishing  benefits 
such  as  will  exempt  the  employer  from  other  requirements  of 
the  Workmen's  Compensation  Act,  only  if  it  is  found  by  actu- 
arial investigation  to  be  financially  sound.  In  practice,  however, 
there  are  serious  objections  to  this  course.  Strictly  construed, 
such  a  provision,  applied  to  voluntary  insurance,  calls  for  rates 
varying  with  the  age  upon  admission.  This  is  inconvenient, 
annoying,  and,  if  the  membership  is  maintained  by  means  of 
legal  compulsion,  unnecessary. 

Moreover,  with  the  accumulation  of  reserves,  members  come 
to  feel  that  they  have  a  vested  interest  in  the  assets  of  the  society. 
Upon  leaving  the  service  of  an  employer,  they  will  desire,  there- 
fore, either  to  be  permitted  to  keep  up  their  insurance  or  to  with- 
draw their  funds.  If  permission  is  given  to  do  the  latter, — it  is 

153 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 

not  usually  satisfactory  to  permit  them  to  keep  up  their  insurance, 
— they  will  not  understand  why,  if  they  have  not  drawn  benefits 
themselves,  they  should  not  be  able  to  get  back  the  entire 
amount  of  their  contributions,  perhaps  with  interest  as  well.  In 
other  words,  any  system  of  insurance  against  sickness  through 
an  establishment  fund  which  brings  about  a  considerable  ac- 
cumulation of  money  is  certain  to  be  provocative  of  hopes 
and  expectations  in  regard  to  cash  benefits  to  withdrawing 
members  which  cannot  be  realized,  and  is  likely  also,  sooner  or 
later,  to  become  the  cause  of  serious  differences  between  the 
employer  and  the  employe.  This  is  particularly  true,  unless  the 
contributions  of  the  employer  are  so -liberal  that  they  silence 
all  objections  and  also  afford  a  means  of  escape  from  the  diffi- 
culties which  otherwise  surround  the  problem. 

Sickness  insurance  societies  of  nearly  all  these  types  existed 
in  Germany  before  the  laws  introducing  the  new  method  of 
dealing  with  industrial  accidents  were  enacted.  From  the 
outset,  Bismarck  recognized  that  it  was  of  the  greatest  impor- 
tance to  preserve  and  strengthen  the  societies,  enlarge  their 
activities,  and  utilize  them  in  connection  with  the  new  system 
of  social  insurance.  This  he  did  in  the  following  manner: 

The  first  thirteen  weeks  of  disability,  whether  caused  by 
accident  or  sickness,  are  provided  for  through  the  benefits  of 
the  sickness  insurance  societies.  All  employes  are  required  to 
be  members  and  to  maintain  their  membership.  It  is  the  duty 
of  the  employer  to  know  that  each  one  of  his  employes  belongs 
to  and  continues  a  member  of  such  a  society.  If  the  employer 
fails  in  this  duty,  he  is  penalized,  as  will  hereafter  be  described. 
Under  this  system,  as  soon  as  an  employe  becomes  disabled, 
whether  by  sickness  or  accident,  he  is  given  medical  attention, 
furnished  medicines  or  admitted  to  a  hospital,  if  necessary, 
while  the  support  of  his  family  is  provided  for  by  definite  weekly 
payments  equal  to  one-half  his  wages. 

Membership  in  a  private,  local  society,  in  a  trade  union 
or  in  an  establishment  fund,  furnishing  benefits  required  by 
law,  is  sufficient  and  satisfactory.  The  government  needed, 
however,  to  provide  for  cases  of  those  who  either  would  not  or  at 
least  did  not  join  societies  of  one  of  these  three  classes.  It  must 

'54 


SICKNESS    INSURANCE 

be  remembered  that  these  societies  would,  in  the  nature  of  things, 
not  be  compelled  to  admit  one  to  membership  if  they  did  not  see 
fit  to  do  so.  Accordingly,  provision  was  made  for  the  establish- 
ment of  a  local  or  communal  society  in  each  district.  In  case  a 
workman  did  not  belong  to  a  society  of  one  or  the  other  classes, 
he  was  required  to  become  a  member  of  the  communal  society, 
which  in  turn  was  obliged  to  admit  all  such  to  membership. 

The  sickness  insurance  society  to  which  the  workman 
belongs  furnishes  him  with  a  book.  In  order  that  the  employer 
may  know  certainly  that  the  former  is  continuing  his  membership, 
he  usually  takes  charge  of  the  book,  and  most  frequently  pays 
the  workman's  contributions  for  him,  deducting  them  from  his 
wages.  Unless  the  workman  is  a  member  of  a  private,  mutual  aid 
society  and  not  of  a  trade  guild,  an  establishment  society,  or  the 
public  local  society,  the  employer  must  contribute  one-third 
of  the  cost  of  the  sickness  insurance.  He  must  thus  contribute 
one-half  as  much  as  the  workman  is  called  upon  to  contribute. 
This  is  expected  to  be  changed  in  the  new  German  laws  so  that 
the  employer  shall  contribute  one-half  of  the  total  or  as  much 
as  the  workman.  Should  the  employer  fail  to  see  that  a  given 
workman  is  a  member  of  a  sickness  insurance  society,  then  the 
workman  when  disabled  either  through  sickness  or  accident  is 
taken  care  of  by  the  public  communal  society,  precisely  as  if  he 
were  a  member.  The  bill  is  sent  to  the  employer  who  is  re- 
quired, in  addition,  to  pay  the  back  contributions  both  of  the 
workman  and  himself  for  the  period  during  which  the  former 
was  not  a  member.  He  may  even  be  subjected  to  a  fine.  Under 
these  circumstances,  employers  do  not  often  neglect  to  see  that 
their  employes  are  members  of  these  societies. 

In  other  countries,  with  the  exception  of  Austria,  where 
the  development  is  along  much  the  same  lines,  sickness  insur- 
ance has  not  so  far  been  made  obligatory.  In  most  of  these, 
however,  under  the  workmen's  compensation  acts,  benefits  on 
account  of  disability  due  to  accident  are  not  payable  for  an 
initial  period  of  from  one  week  to  as  high  as  four  weeks,  on  the 
supposition  that  this  period  will  be  covered  by  sickness  insurance. 
This  expectation  is  not  wholly  disappointed;  but  investigation 
does  not  show  that  it  is  entirely  fulfilled.  Some  employers  exer- 

'55 


INSURANCE   AGAINST   SICKNESS    AND   DEATH 

else  such  an  influence  upon  their  workmen  that  every  man  will  be 
insured,  especially  when  the  employer  makes  a  contribution; 
but  other  employers  neglect  the  matter.  Unfortunately,  as  the 
societies  are  voluntary,  there  is  no  such  certainty  as  exists  under 
the  German  and  Austrian  compulsory  system,  that  there  will  be 
sufficient  numbers  of  young  recruits  to  keep  the  average  age  and 
average  rate  of  sickness  premiums  comparatively  stable.  Accord- 
ingly those  defects  prevail  that  have  already  been  described.  Such 
societies,  filled  with  a  large  number  of  older  members,  obliged 
to  charge  a  heavy  rate  and  unable  to  compete  with  more  newly 
organized  societies,  where  insurance  is  temporarily  cheaper, 
are  likely  to  be  unsound  and  unreliable.  As  they  fail  or  become 
weaker  and  dearer  the  confidence  of  the  workingman  in  sickness 
insurance  is  shaken,  and  he  is  discouraged  from  joining  any 
organization. 

It  must  be  acknowledged  that  even  at  the  best,  as,  for 
instance,  in  Denmark,  Sweden  and  Great  Britain,  in  all  three 
of  which  countries  sickness  insurance  on  a  voluntary  basis  is 
highly  developed,  these  societies  do  not  supplement  in  any  com- 
prehensive way  the  compensation  for  the  consequences  of  industrial 
accidents  required  by  the  laws  of  the  countries  referred  to  above. 
On  the  contrary,  the  following  unfavorable  conditions  are  found: 

(1)  Very   many   of   the   workmen    are    not    protected    by 
sickness  insurance  at  all,  with  the  result  that  they  are  not  imme- 
diately and  adequately  taken  care  of  at  the  beginning  of  a  dis- 
ability. 

(2)  Where  sickness  insurance  does  exist  it  frequently  over- 
laps  the   compensation   afforded  under    the  accident  insurance 
statute.     The  workman  is  required  to  carry  unnecessary  protection 
which  increases  the  probability  of  simulation.     After  a  certain 
limited  time  he  is  in  receipt  of  two  benefits,  one  under  the  law, 
and  one  through  the  private  insurance  society. 

(3)  In  the  same  way,  sickness  insurance,  especially  in  those 
countries  where  it  is  highly  developed  and  where  societies   have 
put  themselves  on   a   sound   basis,   often   extends   to  insurance 
against    permanent  invalidity  and  also  to  an  accumulation    of 
money  to  furnish  old  age  pensions.    This  embraces  the  periods 
of  invalidity  covered  by  accident  insurance  or  accident  benefits 

156 


SICKNESS    INSURANCE 

payable  by  employers,  and  so  calls  for  a  considerable  contribution 
from  the  workman  which  is  unnecessary.  In  addition  to  these 
defects,  there  is  the  further  serious  disadvantage  that  it  is  pre- 
cisely by  reason  of  permanent  and  old  age  benefits  payable  by 
these  voluntary  sickness  insurance  societies,  that  their  premiums 
are  so  high  and  their  reliability  so  doubtful. 

Under  the  obligatory  system  of  sickness  insurance,  on  the 
other  hand,  benefits  are  confined  to  a  limited  period,  those  be- 
yond that  period  being  taken  care  of  by  various  features  of  the 
new  legislation.  The  solvency  of  these  insurance  companies 
if  they  limit  their  work  is  absolutely  assured  by  the  compulsion 
which  constantly  recruits  their  membership.  It  was  found  to  be 
the  virtually  unanimous  opinion  of  all  delegates  and  others  in 
attendance  at  the  Seventh  International  Congress  on  Working- 
men's  Insurance  at  Rome,  October,  1908,  irrespective  of  country, 
that  an  obligatory  system  of  insurance  against  sickness  had  worked 
far  better  than  any  of  the  voluntary  systems.  This  opinion,  as  a 
result  of  independent  investigations,  is  concurred  in  by  the  pre- 
sent administration  in  Great  Britain.  It  has  also  been  endorsed 
by  a  special  commission  sent  to  Germany  to  study  obligatory  sick- 
ness insurance  on  behalf  of  the  Trades  Union  Congress  of  Great 
Britain.  The  commission  found  that  the  system  works  in  a 
manner  satisfactory  to  employers,  employes  and  the  general 
public;  and  that  the  most  salutary  results  have  been  realized. 
This  attitude  has  been  most  recently  expressed  by  the  enact- 
ment of  a  new  law  in  Norway,  September  18,  1909,  provid- 
ing for  compulsory  insurance  against  sickness,  of  all  wage-earners, 
in  societies  created  and  controlled  by  the  state,  unless  they  are 
insured  in  other  recognized  sickness  insurance  societies;  and 
for  voluntary  sickness  insurance  of  all  citizens  of  Norway  whose 
annual  income  is  less  than  a  certain  amount,  in  societies  created 
by  the  state. 

At  the  outset  it  was  generally  believed  that  the  amount  of 
simulation  would  be  very  large  if  membership  was  not  confined 
to  small  societies  in  which  the  members  were  well  acquainted 
with  one  another,  and  could  keep  a  sharp  eye  on  claimants,  and 
thus  prevent  waste  of  funds  in  the  payment  of  trumped-up 
claims.  Yet  managers  of  sickness  societies  throughout  Germany, 

'57 


INSURANCE    AGAINST   SICKNESS   AND    DEATH 

usually  leaders  of  workingmen  and  frequently  of  the  Social  Demo- 
cratic party,  are  unanimous  in  the  belief  that  the  best  results 
have  been  obtained  in  Leipzig,  Dresden  and  other  places  where  a 
strongly  centralized  local  body  has,  with  the  general  consent  of 
workingmen  and  employers,  supplanted  all  other  forms  of  sickness 
societies.  In  centralized  societies  the  cost  of  administration  has 
been  lessened,  simulation  reduced  to  a  minimum,  the  care  of  the 
sick  and  disabled  improved,  cost  of  medical  attendance  lowered, 
and  better  provisions  for  cure  have  been  afforded  through  hos- 
pitals and  sanatoria.  Methods  of  finding  employment  for  the 
partially  disabled  have  also  proven  more  effectual,  the  collection 
and  disbursement  of  funds  have  been  more  regular,  reliable  and 
satisfactory,  and,  in  short,  the  system  has  been  more  successful  in 
every  respect. 

It  must  be  borne  in  mind,  however,  that  in  Germany,  except 
in  the  case  of  a  purely  private  society  to  which  employers  do  not 
contribute,  societies,  whether  private  and  local,  connected  with 
the  trade  or  with  the  establishment,  or  public  and  local,  have  two- 
thirds  of  their  boards  of  management  elected  by  members,  em- 
ployers being  entitled  to  appoint  the  other  third.  Practice  has 
shown  that  this  management  is  effectual  and  economical,  that 
societies  are  careful  and  even  critical  in  regard  to  claims  made 
by  members,  and  that,  in  the  administration  of  affairs,  differ- 
ences between  representatives  of  employers  and  representatives 
of  workingmen  on  the  board  are  infrequent  and  insignificant. 

Results  of  this  system  from  the  standpoint  of  the  com- 
munity have  been  good,  a  fact  testified  to  by  statesmen,  em- 
ployers, employes,  and  all  others  familiar  with  it.  As  has  been 
stated,  the  mere  assurance  that  he  will  not  be  thrown  into  the 
position  of  a  common  pauper  when  disabled  by  sickness,  but  will 
have  good  care  and  be  restored  to  health  and  vigor  as  quickly 
as  possible,  while  his  family  in  the  meantime  will  be  supported 
from  a  fund  to  which  he  himself  contributes,  has  rendered  the 
German  workingman  self-reliant  and  has  greatly  increased  the 
effectiveness  of  his  labor. 

The  committee  sent  over  by  the  British  Trades  Union 
Congress,  after  a  careful  and  painstaking  investigation,  reported 
that  the  system  had  not  merely  done  nothing  to  break  down  trade 

158 


SICKNESS    INSURANCE 

unionism  in  Germany  but  had  constantly  assisted  it  to  gain  a 
stronger  foothold;  and  that  the  custom  of  representatives  of 
employers  and  of  workmen  serving  upon  common  boards  in 
sickness  insurance  societies  had  done  much  to  forward  confer- 
ences on  business  matters  between  representatives  of  trade 
unions  and  employers  under  conditions  which  made  for  a  fair 
discussion  of  the  grievances  of  union  workmen.  Special  attention 
was  also  called  to  the  fact  of  the  entire  absence  of  slums  in 
Germany.  It  may  also  be  pointed  out  in  this  connection  that  in  no 
country  in  the  world,  perhaps,  have  workmen  shown  themselves  to 
be  so  free  from  domination  or  undue  influence  on  the  part  of  elh- 
ployersas  in  Germany  ,where  the  Social  Democratic  or  workingmen's 
party  casts  a  larger  vote  than  any  other  single  political  party  in  the 
empire.  In  the  main  it  confines  its  program  to  practical  matters, 
instead  of  running  wild  on  idealistic  theories.  This  body  of  men, 
numbering  millions  of  voters,  is  in  accord  with  employers  and  all 
other  classes  of  German  citizens  in  holding  that,  whatever  minor 
improvements  might  and  doubtless  will  be  made  in  the  present 
insurance  system,  it  is  providing  the  best  possible  means,  mor- 
ally and  materially,  of  establishing  workingmen  upon  a  self- 
reliant  and  independent  footing. 

Workingmen  temporarily  out  of  work  may  keep  up  their 
insurance  voluntarily  by  paying  the  premium  directly;  but  the 
probability  that  they  will  remain  in  good  standing  is  not  great. 
Such  cases  cannot  be  adequately  dealt  with  except  through  un- 
employment insurance.  It  is  found  that  in  times  when  work  is 
slack  there  are  more  claims  for  disability.  This  is  doubtless  due 
partly  to  simulation,  but  yet  more,  as  is  everywhere  testified, 
to  demands  for  sick  benefits  by  workingmen  who  are  really  out 
of  condition  and  ought  not  to  have  been  working  for  some  days 
or  weeks  previously. 


159 


VIII 
FUNERAL  INSURANCE 

FROM  the  earliest  organization  of  friendly  or  sickness  insur- 
ance societies,  benefits  to  cover  expenses  of  funeral  and 
burial  have  been  paid  upon  the  deaths  of  members,  and  in 
some  cases  upon  the  deaths  of  their  wives.  Usually,  these  bene- 
fits have  been  small,  not  more  than  was  actually  necessary  to 
cover  expenses,  and  have  varied  from  the  equivalent  of  about  $10 
in  some  countries  to  about  f  100  in  the  most  liberal  friendly  soci- 
eties in  Great  Britain.  In  a  few  cases,  this  privilege  was  later  ex- 
tended to  payment  of  small  benefits  upon  the  deaths  of  children 
of  members;  but  in  practice  this  concession  greatly  complicated 
matters  and,  unless  a  special  premium,  or  assessment,  was  col- 
lected for  each  child,  imposed  an  unequal  burden  upon  those  who 
had  few  or  no  children  dependent  upon  them.  When  payment 
was  exacted  for  each  child,  the  plan  soon  developed  into  some- 
thing akin  to  industrial  insurance,  as  supplied  by  stock  companies. 
Among  affiliated  societies  with  their  lodge  system  and  dem- 
ocratic or  representative  plan  of  government,  the  death  and  burial 
of  a  member  called  for  special  provision.  Such  societies  have 
usually  taken  charge  of  the  funeral,  either  wholly  or  in  part, 
performing  certain  ceremonies  at  the  house  and  at  the  grave; 
and  it  is  but  natural  that  the  expense  should  fall  upon  them. 
During  the  last  illness  there  are  fraternal  duties  to  be  performed, 
such  as  that  of  members  of  the  same  lodge  caring  for  a  dying 
brother  during  the  night  watches,  and  the  paying  of  proper 
respect  to  the  dead.  One  of  the  functions  of  these  organizations 
has  always  been  to  see  that  members  are  given  decent  burial. 
As  in  the  case  of  sickness  insurance,  these  societies  paid  no  atten- 
tion to  the  requirements  %of  soundness  in  assessing  members  for 
death  benefits.  Merely  enough  money  was  currently  collected  to 
meet  the  present  needs.  In  the  beginning  only  young  men  or  at 

1 60 


FUNERAL    INSURANCE 

most  only  men  in  the  working  years  of  life  were  admitted  to 
membership.  After  a  time  conditions  changed  because  persons 
continued  to  belong  who  were  infirm  and  old,  with  the  result  that 
the  number  or  amount  of  assessments  were  increased.  These 
conditions  were  ruinous  to  all  small  associations,  the  members 
usually  seeing  no  way  to  deal  with  the  situation  but  to  with- 
draw and  go  into  a  younger  organization.  Larger  societies,  and 
particularly,  as  has  been  seen,  the  affiliated  societies,  by  means 
of  readjustment  of  rates  under  expert  guidance  and  by  exercise 
of  courage,  determination  and  prudence,  were  sometimes  brought 
to  a  solvent  and  permanent  basis;  but  only  by  means  of  stringent 
and  even  harsh  measures. 

The  embarrassment  on  account  of  faulty  systems  was  even 
greater  when  the  insurance  was  upon  the  lives  of  members  than 
when  upon  their  health.  In  the  latter  case,  while  the  hazard 
was  an  increasing  one,  the  increase  was  insidious  and  gradual, 
due  to  the  fact  that  no  capitalized  value  was  set  up.  Only  enough 
was  collected  to  meet  payments  to  disabled  members  as  they  fell 
due.  On  the  contrary,  when  a  member  died,  a  lump  sum  had  to 
be  paid,  and  as  the  danger  of  death  increased  steadily  with  years, 
becoming  a  certainty  in  old  age,  an  increasing  hazard,  calling  for 
the  full  amount  of  insurance  at  one  time,  had  to  be  met.  This 
ultimately  fell  upon  the  society  with  crushing  severity.  When, 
by  means  of  withdrawals  of  the  younger  and  stronger  men  and  of 
refusals  on  the  part  of  others  to  join,  the  society  became  com- 
posed almost  exclusively  of  the  ailing  and  old,  the  end  was  not 
far  off.  Even  before  it  was  reached  the  cost  became  excessive, 
especially  when  it  is  remembered  that  the  persons  from  whom  it 
was  collected  were  least  able  to  meet  it. 

Manifestly,  life  insurance  which  is  to  furnish  protection 
throughout  life  and  to  treat  all  members  equitably  requires  a  level 
rate  of  payment  if  the  cost  in  later  years  is  to  be  kept  down  to 
a  reasonable  sum.  This  necessitates  the  setting  aside  of  a  surplus 
out  of  earlier  premium  receipts  as  a  reserve  to  meet  demands 
when  members  have  become  old  and  when  the  premium  cur- 
rently paid  is  smaller  than  the  financial  equivalent  of  the  hazard 
of  death.  In  other  words,  a  reserve  system  is  absolutely  requisite 
for  the  solvency  and  permanency  of  these  institutions  when  mem- 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

bership  therein  is  entirely  voluntary,  and  one  may  join  or  not,  or 
having  joined,  may  remain  or  retire  as  he  pleases. 

In  some  cases,  notwithstanding  the  defects  of  the  plan, 
funeral  benefits  have  for  long  periods  been  supplied  by  societies 
of  this  class,  prior  to  that  disintegration  setting  in  which  has 
usually  accompanied  the  experiment.  This  has  been  due  to  one  or 
more  of  the  following  exceptional  conditions:  When  funeral  bene- 
fits are  very  small,  so  that  while  the  cost  to  the  society  is  high  for 
the  benefits  supplied  it  is  insignificant  as  compared  with  the 
earnings  of  the  member,  the  disproportion  between  the  value  of 
the  benefit  to  the  members  and  what  he  is  paying  for  it  does  not 
make  so  serious  an  impression.  This  is  also  true  when  other  bene- 
fits are  much  greater  than  funeral  benefits  and  are  being  provided 
at  a  moderate  cost.  It  is  particularly  true  when  in  addition 
to  insurance  there  are  advantages  of  membership,  as  in  the  case  of 
trade  unions,  or  of  social  distinction  and  opportunity  for  diversion, 
as  in  some  of  the  affiliated  societies.  Of  course,  none  of  these 
compensating  advantages  is  sufficient  to  offset  the  dispropor- 
tion of  cost  to  value  if  for  any  reason  the  attention  of  the  young 
is  directed  in  some  marked  fashion  to  the  fact  that  they  are 
paying  far  too  much  for  the  life  insurance  they  are  receiving. 
If  funeral  benefits  are  large  and  the  cost  is  a  considerable  burden 
which  can  conveniently  be  compared  with  other  means  of  secur- 
ing the  same  benefits  at  a  lower  price  elsewhere,  even  the  attrac- 
tions above  named  will  scarcely  enable  the  society  to  hold  its 
old  members  and  attract  new  ones. 

The  danger  of  funeral  and  burial  benefit  features  when 
conducted  along  unsafe  lines,  in  connection  with  a  sickness  insur- 
ance society,  has  been  recognized  in  many  countries,  and  in  most 
of  them  where  voluntary  insurance  is  as  yet  the  only  form,  soci- 
eties have  themselves  had  to  cope  with  the  matter.  This  they 
have  done,  either  by  dropping  burial  and  funeral  benefits  alto- 
gether, or  by  rigidly  limiting  these  amounts  so  that  the  propor- 
tion of  the  total  cost  of  membership  attributable  to  this  form  of 
insurance  is  small. 

In  Denmark,  evils  resulting  from  the  combination  of  the 
two  forms  of  insurance  (which  when  the  business  is  conducted  in 
a  proper  manner  may  be  combined  most  advantageously),  be- 

162 


FUNERAL    INSURANCE 

came  so  apparent  that,  under  the  recommendations  of  the  gov- 
ernment supervisor  of  friendly  societies,  a  law  was  passed  requir- 
ing a  complete  separation  of  the  two  functions  in  all  societies 
thereafter  organized  and  encouraging  the  separation  of  it  in  those 
already  in  existence.  Under  the  law,  a  sickness  society  may  not 
furnish  funeral  and  burial  benefits,  though  a  separate  association 
composed  of  the  same  persons  or  of  as  many  as  desire  to  join  may 
be  organized  for  that  purpose  and  be  conducted  under  the  same 
management.  No  individual  may  join  a  burial  society  unless 
he  is  a  member  of  a  sickness  society. 

In  the  same  country,  an  ingenious  reinsurance  scheme 
introduced  under  the  recommendation  of  the  same  astute  super- 
visor, enables  societies  burdened  with  too  many  old  lives  to  free 
themselves  from  the  perils  which  might  result  from  too  great  a 
number  of  deaths  in  a  short  period.  Under  this  plan  funds  col- 
lected are  placed  in  a  common  treasury  the  managers  of  which 
call  upon  each  society  for  its  share  of  the  aggregate  actual  cost, 
apportioned  on  the  basis  of  a  mortality  table.  The  method  leaves 
inherent  defects  of  the  assessment  plan  untouched,  but  enables 
societies  to  bring  about  a  readjustment  of  their  own  rates,  and 
protects  them  from  the  disturbance  of  averages  due  to  the  presence 
of  a  few  lives  subject  to  a  very  high  rate  of  mortality. 

Attempts  to  furnish  funeral  benefits  in  sickness  insurance 
societies  have,  as  just  stated,  been  dealt  with  in  different  fashions: 
(i)  by  the  introduction  of  compulsion;  (2)  by  the  cutting  off  of 
such  benefits  altogether;  (3)  by  their  reduction  to  nominal 
amounts;  (4)  by  the  accumulation  of  funds  sufficient  to  maintain 
the  benefit  and  by  setting  up  their  capitalized  value  as  a  liability, 
together  with  the  proper  reserve  called  for  by  the  increasing 
nature  of  the  hazard. 

When  adequate  rates  of  premiums  have  been  established 
and  sufficient  reserves  are  carried,  there  no  longer  remains  a 
reason  for  rigidly  limiting  the  amount  of  the  benefit.  This 
is  the  principle  upon  which  reputable  insurance  companies  are 
conducted,  and  it  has  been  fully  recognized  in  most  of  the  leading 
friendly  societies  of  Great  Britain.  The  latter  having  made  such 
readjustment,  have  taken  advantage  of  the  registration  act,  make 
a  valuation  periodically,  and  have  brought  themselves  up  to,  or 

163 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

very  near,  complete  financial  solvency.  In  doing  this,  however, 
they  have  departed  from  the  original  intention  of  the  friendly  soci- 
ety, which  was  to  furnish  mutual  aid  in  time  of  need,  and  during 
sickness;  and  at  most  to  provide  burial  for  the  dead.  In  many 
societies,  at  present,  members  are  permitted  to  carry  more  insur- 
ance than  is  necessary  to  cover  funeral  and  burial  expenses. 

In  the  Manchester  Unity  of  Odd  Fellows  of  Great  Britain, 
for  example,  a  considerable  variety  and  choice  of  plans  is  offered. 
Insurance  may  be  taken  up  to  as  high  as  £200  ($974),  which 
is  the  limit  under  the  Friendly  Societies  Act.  The  average 
amount  is  about  £20  ($97.40)  approximately  four  times  the 
cost  of  funeral  expenses.  When  such  amounts  of  insurance 
are  allowed  and  taken,  the  society  is  conducting  a  business  sim- 
ilar in  all  essentials  to  the  regular  life  insurance  business  as 
carried  on  by  mutual  and  stock  companies.  It  must  be  judged 
primarily  by  the  same  standards;  namely,  reliability  and  economy. 

With  adequate  rates  and  sufficient  reserves,  such  a  society 
theoretically  may  be  as  reliable  as  any  insurance  company. 
To  demonstrate  this  is  a  complex  undertaking  and  involves  a 
recognition  not  merely  that  the  laws  of  mortality  are  the  same  and 
that  similar  provisions  will  bring  similar  results  in  strengthen- 
ing solvency,  but  recognition  of  the  fact  that  in  the  democratic 
system  of  control,  found  in  these  societies,  there  is  no  greater 
peril  to  prudent  investment  of  funds  than  in  the  more  highly 
organized  systems  in  stock  and  mutual  life  insurance  companies. 

The  funds  of  the  Manchester  Unity  of  Odd  Fellows,  it 
is  claimed,  have  been  invested  with  as  much  care  as  those  of  life 
insurance  companies,  although  in  this  affiliated  society  each 
lodge  has  complete  control  over  its  own  investments,  which  are 
authorized  by  a  vote  of  the  members.  On  the  other  hand,  since 
each  lodge  carries  its  own  mortality  risk  and  pays  its  own  death 
claims,  the  affiliated  society  playing  no  part  in  the  distribution  of 
the  risk,  the  possibilities  of  insolvency  due  to  sudden  and  unex- 
pected demands  on  the  treasury  are  materially  greater  than  they 
would  be  in  an  insurance  company  of  equal  size.  For  this  and 
other  reasons  a  large  proportion  of  the  lodges  in  the  Manchester 
Unity  are  still  insolvent. 

In  the  matter  of  careful  management,  it  is  generally  con- 

164 


FUNERAL    INSURANCE 

ceded  that,  taking  into  account  all  the  advantages  they  have 
offered,  friendly  or  fraternal  societies  everywhere  have  been 
extraordinarily  economical.  This  has  been  due  largely  to  the  fra- 
ternal spirit  and  to  the  free  or  inexpensive  service  of  members 
who  found  their  chief  reward  in  the  confidence  and  respect  shown 
them  by  election  to  office,  accepting  it  because  of  the  honor  and 
opportunity  for  usefulness  it  gave,  rather  than  for  financial 
compensation. 

Economy  in  management  was  also  in  large  degree  due  to 
the  recruiting  of  membership  by  means  of  mutual  acquaintance; 
members  influencing  others  to  join  either  without  remuneration 
for  such  services  or  receiving  a  small  honorarium  in  the  way 
of  a  prize  or  reward.  To  the  extent  to  which  they  have  abandoned 
the  underlying  principles  of  fraternalism,  by  the  introduction 
of  the  deputy  or  agency  system,  these  societies  have  increased 
their  management  costs;  and  many  fraternal  orders  today  are  the 
shells  of  their  former  selves.  Insurance  protection  is  the  main 
consideration.  The  spirit  of  mutuality  has  become  weakened 
and  expenses  have  grown  rapidly,  without  any  corresponding 
increase  in  the  safety  of  the  protection  accorded. 

Under  the  compulsory  insurance  laws  of  Germany,  while 
the  private  sickness  insurance  societies  were  left  undisturbed 
and  while  every  workingman  is  free  to  join  them  if  he  chooses, 
the  government  intervened  to  prevent  their  attempting  impossi- 
bilities in  the  matter  of  funeral  and  burial  benefits  and  they 
are  now  strictly  regulated  in  this  regard.  Most  of  those  whose 
members  are  compulsorily  insured  supply  but  small  funeral 
and  burial  benefits,  the  amount  being  confined  to  about  $12.50. 
In  a  few  cases,  where  these  societies  have  been  created  in  con- 
nection with  particular  establishments  and  where  the  employer 
makes  liberal  contributions,  conditions  are  different;  here  rates 
of  contributions  and  benefits  have  usually  been  computed  so  as 
to  be  financially  equivalent,  and  adequate  reserves  are  carried, 
thus  avoiding  perils  which  accompany  over-large  burial  benefits. 
In  no  countries,  however  do  the  societies  furnishing  funeral  bene- 
fits completely  supply  the  demand  for  such  insurance.  Industrial 
insurance  companies  find  ample  scope  for  their  operations,  reach- 
ing thousands  whom  the  societies  fail  to  enroll. 

165 


IX 

MATERNITY    INSURANCE 

A  PECULIAR  insurance,  found  in  one  form  or  another  in 
connection  with  sickness  insurance  in  every  country  of 
Europe,  is  maternity  insurance. 

In  discussing  sickness  insurance  in  several  countries,  it  was 
noted  that  where  the  husband  is  insured  a  benefit  is  fre- 
quently paid  at  the  confinement  of  the  wife,  the  amount  being 
perhaps  three  or  five  weeks'  sick  allowance  at  the  rate  which 
would  be  paid  for  the  illness  of  the  husband.  There  is  fre- 
quently, also,  a  funeral  benefit  in  event  of  the  death  of  the  wife, 
one-half  as  much  as  is  paid  when  the  husband  dies.  This  is 
not  by  virtue  of  the  membership  of  the  wife  but  as  a  part  of  the 
comprehensive  scheme  of  friendly  or  sickness  societies  for  the 
insurance  of  their  members. 

In  Germany  and  Austria,  where  sickness  societies  are  a 
part  of  the  general  scheme  provided  under  governmental  authority 
and  supervision  with  membership  obligatory  on  all  wage-earners, 
the  question  naturally  arose  at  an  early  date  whether  confine- 
ment was  to  be  treated  as  a  sickness.  It  was  at  once  agreed 
that  this  should  be  the  case,  and  provision  was  made  and  is  today 
in  force  in  sickness  societies,  for  proper  financial  allowances 
for  disability  arising  from  this  cause.  Duration  of  any  such 
benefit,  unless  special  invalidity  ensues,  is  usually  limited  to 
a  certain  number  of  weeks.  This  plan  differs  essentially  from 
the  one  mentioned  above  in  that  the  benefit  comes  to  the 
woman  herself  as  a  member,  and  not  as  an  indemnity  to  the 
husband  for  financial  burden  imposed  upon  him.  It  is  paid 
because  she  is  a  workingwoman,  and  a  member  of  the  sickness 
insurance  society  to  which  she  as  well  as  her  employer  con- 
tributes and  from  which,  in  consequence,  she  is  entitled  to 

1 66 


MATERNITY    INSURANCE 

draw  benefits.  Naturally,  in  view  of  the  character  of  this 
benefit,  arising  out  of  her  membership,  provided  for  by  her 
contributions,  the  question  arose  at  an  early  stage  whether 
such  benefits  were  to  be  paid  at  the  confinement  of  an  un- 
married woman.  In  the  United  States,  among  the  white  popu- 
lation, in  view  of  the  small  number  of  births  out  of  wedlock 
this  would  not  be  a  matter  of  sufficient  importance  to  call 
for  special  rules.  But  when,  as  in  the  chief  industrial  cities 
of  Germany  and  Austria,  the  proportion  of  births  out  of  wedlock 
is  extremely  high,  the  question  naturally  takes  on  a  great  deal 
of  importance. 

It  was  decided  that  no  distinction  should  be  made.  Sociolo- 
gists and  economists  of  these  countries  argued  that  "a  condition 
and  not  a  theory"  confronted  them,  wage-earners  by  their  actions 
determining  conditions  under  which  children  should  be  born. 
The  state  is  in  the  peculiar  position  of  having  to  accept  these 
conditions:  (i)  because  if  it  were  possible  to  prevent  them,  the 
growth  of  the  working  population  upon  whose  services  the  whole 
structure  of  society  depends  would  be  much  reduced;  and  (2)  be- 
cause of  the  utter  impossibility  of  enforcing  any  other  conditions 
than  those  acceptable  to  the  working  population  itself.  This 
argument  is  given  here  to  make  it  clear  why  no  distinction  is 
made  between  married  and  unmarried  mothers  in  the  sickness 
insurance  laws,  nor  in  the  payment  of  benefits  during  confine- 
ment. 

Conditions  described  have,  of  course,  greatly  emphasized 
the  necessity  for  maternal  insurance.  While  the  mother,  if 
married  and  supported  by  her  husband,  who  is  presumably  at 
work  earning  his  usual  wages,  may  not  be  in  sore  need  of  insurance 
protection,  the  unmarried  mother,  dependent  entirely  upon  her 
wages,  is  in  precisely  the  same  situation  as  if  she  were  ill  from 
any  other  cause;  and  unless  provided  for  by  insurance  may  become  a 
public  burden.  It  is  not  possible  for  the  public  entirely  to  escape 
the  burden,  but  it  is  manifestly  better  that  her  support  should  be 
borne  through  insurance  to  which  the  mother  has  contributed, 
than  through  the  poor  rates,  which  would  further  degrade  her 
and  her  child. 

The  necessity  of  sickness  insurance  that  shall  pay  a  benefit 

167 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

in  event  of  confinement  has  never  been  seriously  felt  in  the  United 
States.  It  is  not  common  for  fraternal  orders,  in  which  men  are 
insured,  to  provide  benefits  for  the  confinement  of  the  wife  of  a 
member.  On  the  other  hand,  fraternal  societies  in  which  women 
are  insured  against  sickness,  often  stipulate  that  nothing  shall 
be  paid  for  disability  from  such  a  cause;  and  such  are  also  the 
usual  terms  of  sickness  policies  issued  by  stock  companies  in 
this  country.  Most  married  women  are  here  afforded  an  ample 
support  by  their  husbands  and  therefore  no  crying  need  exists 
for  insurance  of  this  type. 


1 68 


X 

INSURANCE  AGAINST  SICKNESS    AND   DEATH 
IN  VARIOUS  COUNTRIES 

GREAT  BRITAIN 

THE  best   developed  form   of  workingmen's   insurance  in 
Great  Britain  is  sickness  insurance  in  friendly  societies. 
This  form  of  voluntary  insurance  has  extended  in  Great 
Britain  beyond  anything  to  be  found  in  other  countries.     In  1904, 
out  of  a  total  population  of  42,500,000,  of  whom  13,000,000  were 
workingmen,  the  number  of  friendly  societies  was  nearly  28,000 
and  the  membership  nearly  6,000,000. 

The  history  of  the  friendly  societies  runs  back  to  the 
guilds  of  the  middle  ages,  and  some  of  these  early  workingmen's 
organizations  have  survived  to  the  present  day.  The  larger 
number,  however,  came  into  existence  in  the  nineteenth  century, 
though  as  early  as  the  end  of  the  eighteenth  there  were  several 
thousand  small  local  and  two  large  associations,  the  latter  re- 
sembling the  Free  Masons.  All  these  gave  sick  relief  in  addition 
to  other  benefits,  but  it  was  more  in  the  nature  of  charitable 
assistance  than  insurance. 

Legislation  in  relation  to  the  insurance  branch  of  these 
organizations  began  about  the  end  of  the  eighteenth  century, 
when  the  constant  increase  of  poor  relief  became  a  serious 
burden.  Under  the  law  of  1793  these  societies,  which  until 
then  had  not  been  legally  recognized,  were  permitted  to 
register  and  thus  obtained  certain  privileges.  Since  that  time 
there  has  been  a  distinction  between  registered  and  unregis- 
tered societies.  Further  legislation  was  enacted  in  1819  and 
1829.  Under  the  law  of  1819  societies  were  authorized  to  in- 
vest their  funds  with  the  commissioners  of  the  public  debt  at 
a  higher  rate  of  interest  than  was  otherwise  paid  by  the  gov- 

169 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

ernment,  and  were  permitted  to  register  if  they  furnished  a 
certificate  by  two  competent  actuaries  that  their  premium  rates 
were  adequate.  The  law  of  1829  required  annual  reports. 

In  1846  a  most  important  step  was  taken.  In  place  of 
leaving  the  registration  to  any  judge,  a  special  central  depart- 
ment was  created,  under  a  Registrar  of  Friendly  Societies.  From 
this  time  Parliament  frequently  legislated  concerning  these  soci- 
eties; and  three  parliamentary  commissions  to  inquire  into  their 
condition  were  successively  appointed,  in  1848,  1849,  and  1854. 
In  consequence,  laws  were  passed  further  strengthening  the  re- 
quirement of  adequate  rates,  providing  for  periodical  valuation, 
and  permitting  trade  unions  to  register. 

The  importance  of  maintaining  solvency  on  an  actuarial 
basis  was  recognized,  but  few  societies  proved  to  be  in  anything 
like  a  sound  state.  The  exhaustive  investigation  of  a  royal  com- 
mission in  1870  exposed  these  conditions  ruthlessly.  To  remedy 
them,  the  law  of  1875  was  passed,  which  materially  extended 
the  functions  of  the  friendly  societies,  brought  about  a  re-organ- 
ization of  the  registry  bureau,  imposed  penalties  for  bad  manage- 
ment, and  required  publicity  of  the  essential  facts  of  administra- 
tion. It  also  provided  that  annual  reports  of  registered  societies 
should  be  published,  together  with  an  actuarial  valuation  every 
five  years. 

The  law  is  still  imperfect  because  it  permits  unregistered 
societies  to  continue  though  no  new  ones  may  be  organized,  an 
evil  that  was  not  remedied,  even  in  the  latest  revision  in  1896. 
Under  this  last  measure,  seven  persons  may  form  a  friendly  society, 
which  through  voluntary  contributions,  or  from  gifts  or  other 
support,  may  give  assistance  to  its  members,  their  husbands, 
wives,  children,  parents,  brothers,  sisters,  nephews,  nieces,  or 
orphans,  in  cases  of  sickness,  invalidity,  old  age,  widowhood, 
or  minority.  They  may  also  give  benefits  at  the  birth  of  a  child, 
and  at  the  death  of  a  member,  and  may  pay  funeral  costs  on  the 
death  of  a  husband,  wife,  child,  or  widow  of  a  deceased  member; 
may  give  assistance  to  members  while  traveling,  in  cases  of 
need,  shipwreck,  or  loss  of  boats  or  fishing  nets;  and  may  provide 
wedding  outfits,  also  pay  for  the  replacement  of  workmen's 
tools  or  for  insurance  of  the  latter  against  fire.  The  maximum 

170 


GREAT   BRITAIN 

life  insurance  permitted  is  ^200  ($974),  and  the  maximum 
annuity  ^50  ($243.50). 

In  England  registration  is  with  the  chief  registrar;  in 
Scotland  and  Ireland  with  an  assistant  registrar.  In  addition 
to  a  legal  status,  registered  societies  have  a  preferred  claim  for 
dues  in  event  of  the  death  or  bankruptcy  of  a  member,  are  exempt 
from  various  stamp  taxes,  and  may  still  invest  their  reserves  with 
the  public  debt  commissioners  at  a  higher  rate  of  interest  than 
that  usually  paid  by  the  government. 

Up  to  the  present,  membership  has  not  been  made  obligatory. 
The  tendency,  however,  has  been  to  offer  such  encouragement  as 
will  induce  workingmen  to  join.  Societies  are  left  free  to  manage 
their  affairs  in  their  own  way,  the  registrar  having  no  authority 
to  interfere  unless  the  members  call  upon  him  to  do  so.  Even 
then  he  has  no  power  to  impose  reforms.  It  is  true  that  once 
in  five  years  every  society  must  employ  an  actuary  to  value 
its  assets  and  liabilities;  yet  when  this  has  been  done  there 
is  no  obligation  to  take  action  upon  it,  or  to  adopt  any  advice  the 
actuary  may  give.  The  only  positive  requirement  of  the  act  is 
that  members  shall  have  an  opportunity  to  know  the  financial 
condition  of  their  society.  This  provided  for,  each  society  is 
left  to  work  out  its  salvation. 

It  is  not  surprising  that  friendly  societies  have  developed 
a  large  variety  of  insurance  methods  and  that  the  societies  vary 
widely  in  their  activities.  The  royal  commission  distinguished  no 
less  than  seventeen  types;  but  for  our  purpose  it  is  sufficient 
to  call  attention  to  three  main  groups:  ordinary  friendly  societies, 
affiliated  orders,  and  burial  or  collecting  societies. 

In  most  cases,  collecting  societies  are  conducted  as  a  busi- 
ness by  persons  interested  other  than  as  members.  They  are 
usually  burial  societies  paying  benefits  only  in  case  of  death. 
If  they  also  furnish  sickness  insurance,  it  is  incidental.  They 
are  in  fact  industrial  insurance  companies,  and  like  the  latter, 
employ  agents  to  obtain  new  business  and  collect  premiums. 
We  shall,  therefore,  discuss  only  the  first  two  groups. 

Ordinary  friendly  societies  are  by  far  the  most  numerous. 
Usually  they  are  local  in  character,  consisting  of  persons  living 

171 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

in  the  neighborhood,  or  are  confined  to  members  of  the  same  trade. 
They  almost  always  insure  against  sickness,  and  in  addition 
many  furnish  other  benefits. 

The  simplest  and  the  first  to  develop  was  the  society  called 
the  "village  club."  It  was  organized  on  the  plan  of  equal  con- 
tributions from  all  members,  irrespective  of  age.  While  all  were 
young  the  burden  was  heavy  on  none,  but  as  time  went  on,  car- 
ing for  the  old  and  disabled  made  the  cost  oppressive  for  the 
younger  members.  Under  such  conditions,  first  fewer  joined,  and 
then  more  withdrew  to  unite  with  younger  societies.  This  aug- 
mented the  cost  for  those  who  remained;  and  the  village  club 
frequently  passed  away  with  the  generation  which  founded  it. 
Some,  however,  were  wise  enough  to  establish  rates  graded  ac- 
cording to  age  at  entry.  When  these  were  adequate  and  re- 
serves were  accumulated,  the  societies  prospered.  This  was 
especially  true  of  those  that  obtained  the  patronage  of  the 
gentry  and  clergy  of  the  district,  these  honorary  members  taking 
an  active  share  in  the  management  as  well  as  aiding  with  contri- 
butions. Their  superior  knowledge  and  disinterestedness  often 
discovered  weak  points  in  the  system.  Instability  arising  from 
small  numbers,  the  local  character  of  the  organization,  and  insuffi- 
ciency of  rates  or  reserves  soon  became  clear;  and  it  was  found 
advantageous  to  unite  various  village  clubs  in  the  same  district 
into  one  larger  township  or  county  club.  In  such  cases,  the 
county  gentry  might,  by  acting  together  locally  as  members  and 
centrally  as  managers,  insure  the  establishment  of  a  society  large 
enough  to  live,  on  sound  principles.  They  could  thus  get  rid 
of  the  fluctuations  which  necessarily  imperil  the  security  of  a 
small,  local  society,  however  careful  the  calculation  of  its  contri- 
butions and  benefits.  Able  actuaries  would  be  called  in;  and 
adequate  rates  of  contributions  provided  to  meet  all  require- 
ments. A  gift  fund  was  often  raised  for  preliminary  expenses 
in  order  to  insure  stability;  and  great  care  was  exercised  in 
investing  funds.  The  lines  of  such  institutions  combining  local 
management  with  complete  centralization  of  the  funds  were  laid 
out  with  thoroughness  and  precision. 

Typical  of  such  centralized  friendly  societies,  growing  out 
of  small  beginnings  and  still  retaining  the  peculiar  features 

172 


GREAT    BRITAIN 

that  led  to  its  popularity,  is  the  largest  of  the  class,  the  Hearts 
of  Oak.  The  essential  characteristic  of  this  organization  is 
its  simplicity.  For  small  contributions,  it  gives  sick  benefits, 
burial  money,  allowance  at  the  birth  of  a  child  and  insurance  of 
tools  against  fire.  It  does  not,  however,  provide  medical  atten- 
dance. It  is  a  centralized  society,  having  about  350  districts, 
each  with  500  to  1000  members,  making  a  total  of  about  290,000. 
Members  are  not  admitted  above  the  age  of  thirty  nor  unless 
they  earn  at  least  24  shillings  ($5.76)  per  week.  No  women  belong. 
A  medical  examination  for  which  there  is  a  fee  of  two  shillings 
(48  cents)  is  made  by  medical  officers  of  the  society,  located 
conveniently  throughout  the  districts,  and  a  certificate  from  one  of 
these  must  be  obtained  as  a  condition  to  favorable  action.  It  is 
a  cardinal  principle  of  this  society  that  there  is  but  one  class  of 
members,  and  that  all  of  these  must  be  up  to  grade  in  health  when 
admitted.  New  members  are  obtained  only  through  those  who 
already  belong.  To  encourage  this  form  of  extension,  prizes  are 
offered.  Where  ten  are  obtained  within  three  months,  a  member's 
dues  for  the  next  three  are  remitted  as  a  reward.  The  society 
still  employs  a  system  of  uniform  contributions  rendered  possible 
by  keeping  its  maximum  age  for  admission  at  thirty.  These  con- 
tributions are  not  absolutely  fixed  in  amount  but  vary  according 
to  claims  made  upon  the  society  during  the  previous  quarter. 
The  average  is  from  10  shillings  to  los.  6d.  ($2.40  to  $2.52)  per 
quarter.  Dues  are  paid  directly  to  the  central  office  by  means  of 
money  orders  or  post  checks.  Benefits  of  18  shillings  ($4.32)  per 
week  are  given  during  sickness.  These  continue  for  a  period  not 
to  exceed  six  months;  and  if  still  incapacitated  the  member  re- 
ceives thereafter  only  four  shillings  (96  cents)  during  the  remainder 
of  the  disability.  Benefits  of  ^20  (197.40)  are  paid  upon  the  death 
of  a  member,  and  £10  ($48.70)  upon  the  death  of  a  member's 
wife.  The  average  sickness  per  member  is  2.16  weeks  per  an- 
num— a  rather  high  average . 

It  is  not  always  possible  to  prevent  malingering.  Orig- 
inally, when  a  member  became  sick,  two  members  were  notified 
to  visit  him  and  report  to  the  central  office.  For  social  reasons 
this  method  proved  ineffectual.  Often  an  employe  was  ap- 
pointed to  call  upon  an  employer,  and  vice  versa,  or  cronies 

'73 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

upon  a  crony.  The  system  continued,  notwithstanding,  for  sixty 
years;  but  more  recently  when  the  society  extended  its  opera- 
tions, a  new  plan  was  adopted.  Visitors  are  appointed  for  each 
of  the  350  districts.  Each  person  claiming  sick  benefit  comes 
under  the  supervision  of  an  official  visitor,  who  calls  upon  him 
frequently  and  without  notice.  It  is,  of  course,  clear  that  the 
value  of  this  plan  depends  upon  the  character  of  the  visitor. 
Visitors  were  at  one  time  paid  by  the  hour  but  this  method  was 
abandoned  for  obvious  reasons,  and  they  now  receive  from  three 
pence  to  nine  pence  (6  to  18  cents)  per  visit.  When  the  visitor  is  in 
doubt  about  the  validity  of  the  case,  he  may  cause  the  patient  to  be 
examined  by  a  physician  other  than  his  own,  particularly  if  col- 
lusion is  suspected.  The  government  of  this  society  is  extremely 
democratic,  members  being  represented  at  annual  meetings  by 
delegates  elected  from  each  of  the  districts.  These  in  turn  elect 
the  board  and  the  officers. 

Managers  of  friendly  societies  say  that  more  claims  for  in- 
validity due  to  accidents,  and  for  longer  periods,  have  been 
made  since  the  passing  of  the  Workmen's  Compensation  Act 
than  at  any  time  previously.  This  is  believed  to  be  due  to 
malingering,  workingmen  making  claim  both  under  the  act  and 
under  their  certificates  of  membership.  This  statute  has  also 
increased  the  difficulty  of  securing  and  holding  members,  be- 
cause many  reason  that  they  will  not  be  disabled  except  by  an 
occupational  accident  or  disease,  which  will  be  compensated  under 
the  statute. 

An  interesting  modification  of  the  above  centralized  type 
is  the  "deposit"  friendly  society.  The  most  prominent  is  the 
National  Deposit  Friendly  Society.  As  its  name  indicates,  it  is 
a  savings  bank  and  friendly  society  combined.  It  was  founded 
in  1868  by  the  Duke  of  Northumberland,  and  in  1872  became  a 
registered  national  society.  Its  activities,  due  to  the  energy  of 
its  patrons,  have  spread  over  a  considerable  part  of  the  country, 
especially  in  the  southern  districts. 

Out  of  each  member's  payment,  which  he  is  encouraged  to 
make  as  large  as  possible,  a  certain  sum  is  assigned  to  the  benefit 
funds  of  the  society,  the  remainder  being  credited  to  his  own 
account.  When  he  falls  ill,  a  certain  proportion  of  the  sick  pay 

174 


GREAT   BRITAIN 


fixed  when  he  becomes  a  member,  upon  a  scale  varying  with  his 
age  and  other  circumstances,  is  given  him  from  the  benefit  fund; 
the  remainder  he  draws  from  his  own  deposit.  When  he  reaches 
old  age,  his  bank  account  is  converted  into  a  pension,  which  will 
of  course  be  the  larger  the  more  he  has  saved  and  the  less  he  has 
withdrawn  for  sickness.  The  element  of  insurance  in  the  contract 
is  so  small  that  the  managers  claim  that  there  is  no  fear  of  insol- 
vency and  no  necessity  for  valuation.  This  is  not  believed  by  the 
authorities  to  be  the  case  and  the  regular  quinquennial  valua- 
tion is  of  course  required.  On  the  other  hand,  a  member  who 
suffers  from  prolonged  sickness  may  find  relief  fail  him  through 
exhaustion  of  his  savings  at  a  time  when  he  most  needs  it. 

As  an  index  of  the  rapid  growth  of  the  National  Deposit 
Friendly  Society,  the  following  figures  speak  for  themselves: 

TABLE  43. — STATISTICS  OF  THE   NATIONAL  DEPOSIT  FRIENDLY 
SOCIETY,    1897-1905 


Year 

Districts 

Members 

New 
Members 

Invested 
Funds 

(Pounds) 

Annual 
Receipts 

(Pounds') 

Sick  and 
Medical 
Pay 
(Pounds) 

1897 
1901 
1905 

362 

759 
1,350 

25,396 
68,400 
1  38,962 

6,495 

15,563 
23,675 

1  28,073 
296,016 
603,573 

43-334 
1  1  1,384 
202,867 

1  0,408 
29,261 
69,183 

The  society  has  no  paid  canvassers;  but  the  district  secre- 
tary and  the  division  secretary  receive  salaries.  Dues  are  paid 
at  contribution  rooms.  It  has  been  found  that  the  average 
duration  of  payment  of  sickness  benefits  per  member  is  3.2 
days.  This  low  sickness  rate  is  due  chiefly  to  the  fact  that 
benefits  are  not  drawn  unless  absolutely  necessary,  because  a 
part  is  from  the  member's  own  money.  There  is  no  club  doctor 
and  the  member  must  bring  a  weekly  certificate  from  his  physi- 
cian in  case  of  illness. 

The  amount  of  contribution  is  not  fixed;  members  over  six- 
teen years  of  age  make  their  own  rate,  which  automatically  regu- 
lates their  scale  of  sick  and  old  age  pay.  Children  between  five 
and  thirteen  may  pay  six  pence  (12  cents)  per  month;  and  between 

175 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

thirteen  and  sixteen,  sixpence,  one  shilling,  or  is.  6d.  (12,  24, 
or  36  cents).  The  total  weekly  benefit  in  case  of  illness  equals 
the  amount  of  the  monthly  contribution.  In  addition  to  this, 
old  age  pay  granted  after  seventy  is  equal  to  one-half  the  monthly 
contribution.  No  member  is  allowed  to  receive,  as  sick  pay,  more 
than  his  or  her  daily  income,  nor  as  old  age  pay  more  than  is. 
6d.  (36  cents)  per  day;  and  no  member  is  entitled  to  sick  pay 
or  medical  attendance  until  he  has  made  six  monthly  contributions, 
which  he  may  do  in  advance,  and  has  in  addition  a  deposit  equal 
to  this  amount.  This  gives  him  the  position  of  a  member  of  six 
months'  standing.  When  the  deposit  account  of  the  member  is 
exhausted,  payment  of  benefits  also  ceases,  except  for  a  period  of 
grace  allowed  not  more  than  once  in  five  years.  It  is  believed 
by  the  managers  that  in  this  way  simulation  is  reduced  to  a 
minimum.  The  number  of  benefit  members  in  1907  was  169,100. 
The  following  financial  data  for  the  year  1907  may  be  of 
interest: 


TABLE   44. — FINANCIAL   STATEMENT  OF  THE   NATIONAL   DEPOSIT 
FRIENDLY    SOCIETY,    1907 

£  S.      d. 

Monthly  contributions  to  common  sick  fund             190,199  18    7 

Sick  and  medical  pay  from  common  sick  fund               64,267  15     o 

Paid  over  to  members' deposits      .        .        .             125,932  37 
Cost  for  sickness  benefits  per  shilling  of  dues,  4d. 

Total  Payments 

Sick  and  funeral  fund 66,040     19    9 

Medical 26,558     10     5 

Members'  Own  Charge  for 

Sick  pay 18,666  8  i 

Medical  pay 7.958  7  i 

Members' charge  for  management           .        .  25,478  15  10 

Contributions  to  old  age  fund,  including  interest  22,824  7  6 

Payments  from  old  age  fund    ....  599  7  i 

Deposits  received :  69,927  1 1  i 

Withdrawals  from  deposits       ....  47.671  13  o 

Interest  added  to  surplus  fund        .        .        .  8,662  n  10 

Fines  and  sundry  deductions           .        .        .  6,085  17  n 

Members' balances,  December  31      .       .        .  620,212  10  I 

The  second  main  division  of  friendly  societies  is  the  Affili- 
ated Orders,  which  includes  a  number  of  organizations,  often  of 
very  large  membership.  They  originated  in  the  eighteenth  cen- 

176 


GREAT   BRITAIN 

tury,  at  a  time  when  free  masonry  came  once  more  into  promi- 
nence; but  unlike  the  Free  Masons,  their  membership  has  always 
been  composed  only  of  workingmen,  artisans  and  tradesmen. 

At  the  outset,  the  aim  of  these  orders  was  social;  but 
the  custom  of  relieving  distressed  members  was  soon  established 
and  later  became  the  main  feature.  In  order  to  save  the  self- 
respect  of  those  who  fell  into  distress  and  to  prevent  abuse,  it 
was  found  better  to  require  all  to  pay  regularly  a  larger  contribu- 
tion and  thus  make  each  member  without  distinction,  subject  to 
relief  as  a  matter  of  right.  The  development  of  these  lodges  and 
orders  for  the  extension  of  benefits  thus  took  the  place  of  the 
poorly  organized  village  clubs  which  were  constantly  going  to  the 
wall.  After  a  growth  of  a  century,  lodges  of  the  General  Orders, 
the  Abstainers'  Orders,  the  Hebrew  Orders,  Trade  Orders  and 
others  now  fairly  cover  the  entire  country. 

In  1850,  the  orders  were  admitted  to  registry.  Not  until 
1875,  however,  were  they  given  full  recognition.  An  act  carried 
through  by  Sir  Stafford  Northcote  in  that  year  resulted  in  the 
strengthening  of  the  bond  between  the  central  body  of  these 
societies  and  the  local  branches,  which  resulted  in  a  material 
improvement  of  their  condition. 

By  the  provisions  of  this  act,  it  is  necessary  that  there 
should  be: 

(1)  A   central   directing  body  of  such  composition   as  the 

rules  of  the  society  may  provide. 

(2)  A  fund  under  the  control  of  the  central  body,  to  which 

each  branch  is  bound  to  contribute. 

(3)  A  fund  administered  by  each  branch,  or  by  a  committee 

of  officers  appointed  by  the  branch. 

(4)  A  declaration  in  the  rules  of  the  amount  of  control  the 

central  body  shall  have  over  each  branch. 

(5)  A   provision   enabling   the   branch  to  secede   from  the 

society. 

A  branch  cannot  alter  its  rules,  or  obtain  an  official  inspec- 
tion, or  apply  to  the  chief  registrar  to  call  a  special  meeting  or 
dissolve  itself  without  the  consent  of  the  central  body.  If  it 
secedes,  it  must  abandon  its  name.  There  is  here  a  mixture 
of  centralization  with  local  independence  which  is  very  valuable. 

I2F  ,77 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

Administration  of  the  local  fund, — in  general  the  fund  for  sick- 
ness,— is  expressly  reserved  to  the  branch,  which  in  other  respects 
is  under  the  control  of  the  central  body,  subject  to  its  rules. 

The  most  developed  example  of  this  class  is  the  Manchester 
Unity  of  the  Independent  Order  of  Odd  Fellows.  This  society  is 
nearly  one  hundred  years  old  and  today  has  nearly  1,000,000 
members,  distributed  in  semi-independent  lodges,  with  strong 
local  interests.  It  has  so  extended  its  activities  that  lodges,  of 
which  there  are  about  5000,  are  now  to  be  found  throughout  the 
kingdom  and  in  all  the  colonies  as  well  as  in  the  United  States. 
It  is  thus  able  to  protect  artisans  who  find  it  necessary  to  move 
from  place  to  place. 

The  government  of  the  Manchester  Unity  is  entirely  repre- 
sentative. A  conference,  called  the  Annual  Movable  Conference, 
composed  of  deputies  elected  by  the  district  lodges,  meets  an- 
nually. These  conferences  appoint  the  grand  master,  the  deputy 
grand  master,  the  corresponding  secretary,  the  assistant  secretary 
and  nine  others,  who,  together  with  the  last  grand  master,  form 
a  committee  of  management  or  central  body,  which  virtually 
acts  as  a  board  of  directors.  In  this  way  the  lodges  are  brought 
together  in  a  unified  system,  under  which  they  must  comply  with 
the  financial  requirements  of  the  central  board  whenever  they 
change  their  rates,  and  can  adopt  only  such  as  the  actuary  estab- 
lishes for  the  entire  organization.  Each  one,  however,  enjoys  a 
considerable  amount  of  independence  and  may  secede  under 
certain  conditions.  New  members  are  secured  through  existing 
members.  No  commissions  are  paid  and  there  are  no  salaried  or- 
ganizers; secretaries  of  the  local  lodges,  however,  receive  a  small 
stipend.  Dues  are  paid  directly  at  the  door  of  the  meeting  room; 
but  it  has  been  found  that  members  take  little  interest  in  the 
meetings,  many  preferring  to  send  their  wives  and  children  to 
pay  their  dues.  As  a  general  rule,  members  pay  at  the  end  of 
the  quarter  instead  of  fortnightly,  when  the  payments  are  due, 
thus  taking  advantage  of  the  time  limit  set.  In  general,  it  may 
be  said  that  many  join,  not  because  of  the  benefits,  but  are 
persuaded  to  do  so  because  a  friend  or  a  shop-mate  thinks  the 
society  a  good  thing.  It  has  been  found  that  about  50  per  cent 
drop  out  soon  after  entering.  Efforts  are  made  to  cut  expenses 

178 


GREAT   BRITAIN 


to  a  minimum.  Members  are  wholly  in  control,  which  explains 
in  part  the  remarkable  popularity  of  this,  the  largest  of  all  the 
friendly  societies. 

The    following    table    shows    the    premium    rates    usually 
charged. 

TABLE    45. — CONTRIBUTION  PER  MONTH,  FOR  LOWEST  AND  HIGHEST 
SCALE    OF    BENEFITS,    INDEPENDENT  ORDER   OF  ODD    FELLOWS 


Lowest  Scale  Benefits 

Highest  Scale  Benefits 

75.   per  week  first    12    months' 
sickness 

I2S.  per  week  for  first  12  months' 
sickness 

Age 
Last 
Birthday 

35.  6d.  per  week  after  12  months 
£7  on  death  of  member 
^3  i  os.  on  death  of  member's  wife 

6s.  per  week  after  12  months 
£i  2  upon  death  of  member 
/6  on  death  of  member's  wife 

To  Sick 
Fund 

To 

Funeral 
Fund 

Total 

To  Sick 
Fund 

To 

Funeral 
Fund 

Total 

s.      d. 

d. 

s.      d. 

s.    d. 

d. 

s.    d. 

16 

20 

0       10 
0       10^ 

a* 

24 

i 

i       4 
i       6 

4 
4 

i      8 

I        10 

25 

O       I  I  J 

2j 

2 

i       7 

5 

2         O 

3« 

I        I 

3 

4 

i     io£ 

5$ 

2         4 

35 
40 

44 

i       3 
i       8* 

4 
4i 

5* 

7 
1  1 

2         2 

2         2* 
2         74 

3      ^ 

74 

9 

2      9 
3       3 
3      9 

The  steady  growth  of  the  order  in  recent  years  is  worthy  of 
mention.  On  January  i,  1852,  there  were  only  3219  lodges  with  a 
total  membership  of  225,194.  On  January  i,  1898,  the  lodges  had 
increased  to  4698,  and  membership  to  787,962.  In  the  same  way  the 
amount  of  funds  which  on  January  i ,  1865,  was  ^i  ,796,349  ($8,748- 
220)  had  increased  on  January  i,  1898, 10^8,302,390  ($40,432,639), 
and  on  January  i,  1904,  to  ^10,641,162  ($51,822,459).  On  Jan- 
uary i,  1904,  the  membership  had  still  further  increased  and 
included  869,680  adult  male  members,  121,892  juvenile,  12,057 
widows  who  subscribed  for  funeral  benefits  only,  3546  female  and 
1 1 ,570  honorary  members,  making  a  total  of  i  ,018,745  persons  en- 
rolled in  the  society.  This  growth  is  explained  partly  by  the  char- 
acter of  the  government  of  the  society,  partly  by  the  reasonable 
premiums,  but  perhaps  more  by  the  fact  that  for  the  last  thirty  years 

179 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

the  Manchester  Unity  has  made  every  effort  to  establish  a  graded 
scale  of  contributions  from  its  members  in  place  of  the  old  fixed  scale 
which  most  of  the  weaker  societies  have  preserved  to  the  present 
day.  There  are  still,  however,  some  lodges  in  the  organization 
that  persist  in  the  antiquated  method  of  equal  contributions 
from  all  members,  irrespective  of  age;  but  the  board  of  directors 
is  doing  everything  possible  to  correct  these  irregularities,  and  will 
permit  no  change  except  to  adequate  rates.  Each  lodge  every 
five  years  must  have  a  valuation  made  by  the  actuary  of  the  order. 
Should  this  valuation  show  a  deficit  of  15  per  cent,  the  lodge  must 
either  reduce  its  benefits  or  increase  its  rates,  or  both.  If  the  lodge 
is  entirely  insolvent,  steps  are  taken  by  the  general  organization  to 
amalgamate  it,  on  terms  that  are  fair  and  safe,  with  some  neigh- 
boring branch  whose  financial  condition  is  good.  The  society  has 
also  established  an  industrial  insurance  department  for  the  bene- 
fit of  its  members. 

We  shall  now  conclude  with  a  brief  consideration  of  friendly 
societies,  the  two  main  groups  being  taken  together.  At  the 
close  of  1905,  the  number  of  registered  ordinary  friendly  societies 
and  branches  of  the  affiliated  orders,  was  27,000,  with  an  aggre- 
gate membership  of  nearly  6,000,000,  and  accumulated  funds 
amounting  to  ^42,000,000  ($204,540,000).  Six  years  before,  while 
the  number  of  societies  and  branches  was  practically  the  same, 
membership  was  5,250,000,  with  funds  amounting  to  about 
^35,000,000  ($170,450,000).  During  the  period  mentioned,  mem- 
bership has  increased  13  per  cent  and  funds  28  per  cent.  This  is 
certainly  a  gratifying  testimony  to  the  efforts  of  members  to  im- 
prove the  financial  condition  and  stability  of  their  societies. 

The  average  contribution  amounted  to  £i  is.  yd.  ($5.29) 
per  annum,  paid  in  weekly,  monthly  or  quarterly  instalments;  out 
of  each  pound  received,  145.  2d.  ($3.40)  on  the  average  is  expended 
in  benefits,  2s.  id.  (50  cents)  in  management,  and  3$.  9d.  (90 cents) 
set  aside  to  meet  future  contingencies.  Members  of  branches  of 
affiliated  orders  contribute  on  the  average  £i  6s.  2d.  ($6.35)  per 
annum  each,  and  out  of  each  pound  of  total  income  receive  on 
the  average  13$.  lod.  ($3.32)  in  benefits,  2s.  3d.  (54  cents)  being 
expended  in  management,  and  3$.  nd.  (94  cents)  accumulated. 
This  low  rate  of  expense  is  due  to  obtaining  members  through 

1 80 


GREAT    BRITAIN 

co-operative  effort  without  payment  of  commissions,  to  collection 
of  contributions  without  expense,  or  at  a  small  expense,  and  to 
the  service  of  officers  without  salary,  or  for  small  compensation. 
All  these  favorable  conditions  in  turn  are  due  to  the  spirit  of 
fraternity,  which,  together  with  a  lively  sense  of  the  benefits, 
causes  members  to  join,  to  persist,  and  to  serve  when  called  upon. 

It  is  of  the  greatest  importance  that  these  organizations 
should  be  solvent.  As  has  already  been  noted,  all  registered 
friendly  societies  are  required  by  statute  to  report  their  financial 
condition  annually,  and  to  furnish  a  detailed  quinquennial  valua- 
tion by  a  competent  actuary.  Such  reports  when  carefully 
analyzed,  often  expose  lax  management  and  corresponding 
deficiencies.  It  must  not  be  supposed,  however,  that  because 
of  the  existence  of  a  deficiency  in  the  funds  of  the  society,  it  is 
necessarily  on  the  verge  of  dissolution.  The  deficiency  may  be 
the  result  of  temporary  indiscretion  or  variations  of  rates  and  in 
no  way  demonstrates  that  recuperation  is  hopeless. 

In  this  connection,  it  is  well  to  quote  the  careful  words 
of  the  former  Chief  Registrar  of  Friendly  Societies,  Sir  E.  W. 
Brabrook,  from  his  book  on  Provident  Societies,  i! 


"A  word  of  caution  may  be  added  against  forming  too 
hasty  conclusions  adverse  to  friendly  societies  if  it  should  turn 
out  that  the  valuations  in  many  cases  show  an  estimated  de- 
ficiency in  the  funds  to  meet  the  liabilities.  It  would  be  strange 
if  it  were  otherwise  when  for  the  first  time  scientific  tests  are 
applied  to  contracts  that  have  been  in  operation  without  a  scien- 
tific basis  for  a  long  series  of  years.  It  must  be  borne  in  mind, 
however,  that  nothing  is  more  elastic  than  the  contract  made 
by  a  friendly  society  with  its  members;  no  error  more  easy  of 
remedy,  if  found  out  in  time,  than  one  existing  in  the  original 
terms  of  such  a  contract.  Hence  the  words  'insolvency,'  'rotten- 
ness,' and  the  like,  which  we  sometimes  hear  freely  used,  as 
describing  the  general  condition  of  friendly  societies,  are  utterly 
out  of  place.  Of  friendly  societies  in  general  it  may  be  said 
that  as  there  are  no  associations  the  benefits  of  which  are  more 
important  to  their  members,  so  there  are  none  that  are  managed 
with  greater  rectitude  and  few  with  equal  success." 

181 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

Table  46  gives  a  summary  for  the  years  1899  and  1905  of  the 
conditions  of  the  friendly  societies  in  Great  Britain  and  Ireland. 


TABLE  46. — MEMBERSHIP  AND  FUNDS  OF  REGISTERED  FRIENDLY 
SOCIETIES  AND  BRANCHES  IN  GREAT  BRITAIN  AND  IRELAND, 
DECEMBER  31,  1899  AND  1905 


Ordinary 
Friendly 
Societies 

Societies 
with 
Branches 

Total 
Dec.  31, 
1899 

Total 
Dec.  31, 
1905 

Number  of  returns  received 

6,773 

20,144 

26,431 

26,917 

MEMBERSHIP: 

% 

Admitted    

255.053 

203,801 

434.701 

458,854 

Ceased  by  death 

33.504 

31.024 

64,824 

64,528 

Ceased  by  other  causes    . 

173,209 

165,026 

265,475 

338,235 

Remaining  at  end  of  year 

3,226,672 

2,673,246    5,217,261 

5,899,918 

Under  16  years  of  age  . 

297.445 

134.249 

257,068 

431,694 

Between  16  and  20  years  of  age 

'57-734 

181,674 

254,103 

339,408 

Between  20  and  50  years    . 

1,270,789 

1,810,627    2,497,526 

3,081,416 

Between  50  and  65  years  •. 

281,545 

416,709       540,005 

698,254 

Over  65  years 

87,611 

119,209       151,102 

206,820 

Ages  not  stated     . 

1,131.548 

10,778 

'.  5  '7.457 

1,142,326 

RECEIPTS  AND  PAYMENTS  OF 

BENEFIT  FUND: 

Pounds 

Pounds  '    Pounds 

Pounds 

Receipts  from  contributions*. 

2,552,941 

3.035.339    4.945.417 

5,588,280 

Receipts  from  other  sources    . 

776,455 

855,695    1,781,800 

1,632,150 

Total  receipt*    .... 

3.329.396 

3,891,034   6,727,217 

7,220,430 

Payments  for  sickness 

'.637,247 

2,441.775 

4,079,022    ] 

Payments  at  death  . 

385.790 

480,139   4,736,999 

865,929    \ 

Payments  for  other  benefits     . 

368,878 

58,629 

427.507    J 

Other  payments 

325,808 

51.771       768,254 

377.579 

Total  payments 

2.7  '7.723 

3,032,314    5,505,253 

5.750.037 

Balance  on  hand  at  end  of  year 

17,763,102 

23.577.833  32,243.565 

41,340,935 

RECEIPTS    AND     PAYMENTS  OF 

MANAGEMENT  FUND: 

Receipts  from  contributions   . 

330,248 

459,483       635,030 

789,731 

Receipts  from  other  sources    . 

61,792 

50,148       212,089 

1  1  1,940 

Total  

392,040 

509,631       847,119 

901,671 

Payments  for  expenses  of  man- 

agement        .... 

343.919 

472,663       712,757 

816,582 

Other  payments 

10,515 

29,420       136,107 

39,935 

Total  payments 

354.434 

502,083       848,864 

856,517 

Balance  on  hand  at  end  of  year 

293.538 

310,658       508,304 

604,196 

Including  medical  aid. 


From  what  has  been  shown,  it  is  clear  that  friendly  societies 
have  done  much  for  English  workingmen  and  have  contributed 

182 


NORWAY 

largely  to  the  development  of  their  self-respect.  It  would  be  a  mis- 
take, however,  to  urge  that  they  have  greatly  reduced  pauperism,  or 
that  their  membership  is  composed  of  a  class  of  men  that  would 
otherwise  swell  this  already  large  class  in  England.  Thus  in  the  case 
of  the  Ancient  Order  of  Foresters,  where  the  question  was  studied,  it 
was  found  that  of  the  500,000  members,  less  than  100  were  re- 
ceiving poor  relief.  This  is  all  the  more  remarkable,  since  this 
society  does  not  insure  an  income  for  old  age,  and  grants  sick 
benefits  only  in  cases  where  the  aged  member  is  suffering 
from  a  disease  which  prevents  work;  even  then  the  allowance  is 
modest. 

We  may,  therefore,  conclude  that  the  membership  of  these 
societies  is  made  up  of  the  able  bodied,  active  workingmen  of  Eng- 
land. These,  however  poor,  are  determined  on  self  dependence, 
and  have  the  initiative  to  procure  for  themselves,  without  solici- 
tation or  compulsion,  protection  against  the  misfortunes  of  pre- 
mature death  or  invalidity. 


NORWAY 

Sickness  insurance,  as  provided  for  in  the  bill  recommended 
by  the  Norwegian  commission  of  1885,  already  referred  to  in  the 
section  on  accident  insurance  (page  48)  was  compulsory  in  char- 
acter. Under  its  provisions,  workingmen  were  required  to  insure 
themselves  either  in  self-administered  registered  societies  or  in  a 
state  society  covering  the  entire  kingdom.  This  part  of  the  bill, 
as  will  be  recalled,  failed  of  passage,  though  the  accident  insurance 
section  became  law. 

Another  bill,  presented  by  a  second  commission  appointed 
in  1900,  met  a  similar  fate.  In  May,  1907,  however,  the  Storthing 
requested  the  administration  to  present  proposals  for  sickness 
insurance,  compulsory  for  all  workmen  and  employes  in  official 
or  private  service  whose  wages  did  not  exceed  a  given  amount, 
costs  to  be  borne  by  contributions  of  the  insured,  the  state 
and  employers.  The  extent  to  which  communes  and  employers 
were  to  contribute  was  to  be  determined. 

The  Minister  of  Commerce  and  Industry,  accordingly, 
appointed  a  commission  which  included  two  of  the  leading  actu- 

183 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

aries  of  Norway,  to  draft  such  a  measure.  After  much  deliber- 
ation this  body  in  May,  1908,  presented  its  report,  which  resulted 
in  the  law  of  September  18,  1909.  The  commission  proposed  a 
series  of  district  or  communal  organizations,  with  a  central  state 
body,  and  entirely  rejected  the  idea  of  a  national  society  ad- 
vanced by  the  former  commission.  These  societies  are  to  pay 
benefits  for  the  first  six  months  of  illness,  with  not  more  than 
thirteen  weeks  in  the  second  half  year  if  sickness  continues  that 
long.  To  protect  societies  against  excessive  sickness  and  mor- 
tality losses,  an  "equalization  fund"  established  by  the  state 
organization  from  a  part  of  the  state  contributions  was  recom- 
mended. This  portion  of  the  report  is  carried  into  effect  under 
the  new  law. 

The  commission  advocated  a  plan  for  total  and  permanent 
disability  and  old  age  pensions  which  would  defer  the  right  to 
claim  benefits  for  a  considerable  period,  and  would  accumulate 
a  large  fund,  solvent  from  an  actuarial  standpoint  according  to 
standards  applied  to  private,  voluntary  companies.  This  portion 
of  the  report  has  not  yet  been  adopted.  The  report  embraced 
industrial  and  agricultural  workers  as  well  as  unskilled  laborers, 
and  inland  sailors  under  certain  conditions.  The  insured  must 
have  been  employed  at  least,  six  days,  thus  excluding  a  consider- 
able percentage  of  day  laborers.  But,  should  the  latter  not  be 
insured,  they  would  be  provided  for  under  the  accident  insurance 
law.  Seamen  engaged  in  foreign  trade  are  excluded,  as  the 
conditions  which  surround  them  are  so  essentially  different. 
For  these,  the  law  of  July  20,  1903,  continues  to  apply.  Sailors 
engaged  in  coastwise  trade,  however,  are  included  even  if  they 
visit  foreign  shores  for  a  period  of  ten  days. 

Provisions  for  those  obliged  to  insure  are  as  follows:  Work- 
men must  pay  six-tenths  of  the  cost;  employers,  one-tenth; 
the  state,  two-tenths;  and  the  commune,  one-tenth.  For  vol- 
untarily insured  persons,  not  included  under  the  compulsory 
section,  the  employe  pays  seven-tenths,  the  state,  two-tenths, 
and  the  commune,  one-tenth.  According  to  the  report,  the  law 
will  apply  to  about  980,000  persons,  divided  according  to  the 
table  on  the  following  page. 

184 


NORWAY 

TABLE   47. — ESTIMATED    NUMBER    OF    PERSONS    COVERED    BY    SICK- 
NESS   INSURANCE   LAW   OF    1909 

Estimated 
Number 

Compulsorily  insured 400,000 

Voluntarily  insured 40,000 

Married  couples 180,000 

Children  under  fifteen  years  of  age 360,000 

The  commission  estimated  that  the  net  cost  per  year 
would  be  as  follows: 

TABLE  48. — ESTIMATED  NET  COST  OF    INSURANCE    UNDER    SICKNESS 
INSURANCE    LAW    OF    1909 

Crowns 

Benefits 7.06 

Burial  expenses .41 

Medicines  and  physicians 6.40 

Administration  cost 1.13 

Total 15.00 

For  voluntarily  insured  members  this  would  require  a  con- 
tribution of  1 6  crowns  ($4.32)  per  year. 

It  is  intended  to  classify  members  not  only  by  incomes 
but  also  by  occupation  hazards,  rates  to  be  fixed  by  the  state 
accident  insurance  department.  The  following  classes  will  be 
formed  on  the  basis  of  income,  with  the  following  mean  daily 
rates  of  wages : 

TABLE    49. — INCOME    CLASSES    PROPOSED    UNDER   SICKNESS     INSUR- 
ANCE   LAW    OF    1909 

Income  Class  Yearly  Income  Mean  Daily  Wage 

(Crowns)  (Crowns) 

I up    to   300  i.oo 

II 301   to  600  1.50 

III 601    "    900  2.50 

IV 901    "  1400  3.50 

Daily  sick  pay  for  each  class  is  60  per  cent  of  the  mean  daily 
wage.  In  preparing  rates  for  the  proposed  invalidity  and  old 
age  pensions,  the  German  invalidity  experience  was  used  as  a 
basis.  The  commission  has  modified  this  in  a  discriminating 
fashion  by  the  known  Norwegian  experience,  making  slight  varia- 
tions at  the  younger  ages,  larger  variations  in  the  older  ages  and 

185 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

in  the  later  years  of  invalidity  at  all  ages.  They  also  combined 
the  experience  for  male  and  female  mortality.  From  this  they 
computed  the  length  of  the  invalid  life,  and  deduced  the  death 
rates  for  the  healthy.  The  death  rates  were  used  in  determining 
payments  to  be  made  for  invalidity  insurance.  Interest  is  to  be 
computed  at  4  per  cent;  but  eventually  will  probably  be  reduced 
to  3^  per  cent.  The  latest  population  mortality  table  of  Norway 
was  employed  for  these  computations. 

The  commission  regretted  the  absence  of  trustworthy  statis- 
tics of  sickness  insurance  societies  in  Norway.  It  believed  there 
were  approximately  400  of  them,  with  a  membership  of  60,000. 
Premiums  are  paid  entirely  by  the  workers  and  average  a  little 
over  seven  crowns  (11.89)  Per  annum.  Sick  benefits  average  6.9 
crowns  ($1.86)  per  case  of  sickness,  daily  benefit  being  about 
40  cents.  With  the  passage  of  the  law  there  is  every  likelihood 
that  many  of  these  societies  will  disappear,  as  they  will  be  unable 
to  comply  with  its  requirements. 

One  of  the  most  interesting  of  these  sickness  insurance  soci- 
eties is  the  "Anmeldelige  Syge-Kasse,"  a  mutual  association 
organized  with  special  reference  to  sickness  liability  toward  ser- 
vants. Under  the  Norwegian  poor  law  an  employer  is  liable 
for  four  weeks  for  the  care  of  a  sick  servant.  This  society  under- 
takes to  supply  the  benefits  required  by  law.  The  age  limit  is 
from  fourteen  to  sixty  and  there  is  an  admission  fee  of  one  crown 
(27  cents).  Premiums  are  five  crowns  ($1.35)  per  annum.  Should 
the  society  require  additional  funds,  it  has  the  right  to  assess  the 
members;  but  it  has  never  done  so.  Benefits  are  one  crown 
(27  cents)  per  day  for  28  days,  but  insurance  is  not  claim- 
able unless  the  servant  has  been  insured  for  a  period  of  at  least 
four  weeks.  The  society  gives  no  benefits  except  as  stated. 
There  is  a  special  department  of  this  society  which  insures  women 
teachers,  who  pay  premiums  of  10  crowns  ($2.70)  per  annum, 
and  receive  benefits  of  two  crowns  (54  cents)  per  diem  if  they 
are  confined  to  the  house,  and  four  crowns  (|i.o8)  if  they  are 
sent  to  a  hospital. 

Interesting  in  connection  with  the  work  of  this  organi- 
zation is  the  fact  that  all  dues  are  paid  at  the  central  office; 
and  even  of  more  interest  is  the  fact  that  arrearages  are  col- 

186 


SWEDEN 

lected  by  a  bank,  which  receives  4  per  cent  commission  on  collec- 
tions. The  physician's  certificate  is  the  only  check  which  the 
society  employs  to  prevent  malingering.  A  member  must  be 
confined  to  bed  for  four  days,  or  be  unable  to  work  on  account 
of  an  accident. 

The  society  has  approximately  7,000  members  but  em- 
ploys no  agent,  increasing  its  membership  by  advertising  in  the 
newspapers  and  by  means  of  physicians  and  persons  already  be- 
longing. There  is  no  medical  examination,  but  indemnity  is 
not  given  for  sickness  due  to  chronic  diseases.  Premiums  are 
calculated  on  an  actuarial  basis. 


SWEDEN 

In  Sweden  the  first  workingmen's  insurance  law  to  be 
passed  was  the  sick-club  law  of  1891.  Under  this  measure, 
societies  fulfilling  certain  conditions  pay  no  stamp  duty  and  are 
granted  a  subsidy  from  the  state  toward  their  benefits.  To 
obtain  this,  a  society  must  report  periodically  to  the  town  council 
and  be  registered;  it  must  also  have  a  membership  of  at  least  25 
and  a  properly  constituted  directory,  constitution  and  by-laws 
as  defined  by  law.  Supervision  is  exercised  by  state  officials 
especially  as  to  name,  object,  conditions  of  entrance  and  expul- 
sion, dues,  benefits,  amount  of  insurance,  etc.  Funds  may  be 
used  only  to  pay  sickness  benefits  and  management  expenses. 

The  subsidy  in  1906  was  i£  crowns  (40  cents)  per  mem- 
ber to  societies  numbering  less  than  150;  one  crown  (27  cents) 
per  member  for  those  with  101  to  300  members;  50  ore  (13$ 
cents)  per  member  for  those  with  301  to  2600  members;  and  25 
ore  (7  cents)  for  each  member  above  this  number.  In  addition, 
the  latter  must  have  collected  from  its  members  during  the 
previous  year  as  much  as  the  state  contributes.  As  a  result  of 
this  legislation,  these  societies  have  rapidly  increased.  There  are 
now  over  2200,  some  containing  as  many  as  20,000  members. 
In  1906  the  total  membership  was  472,000,  one  out  of  every 
10  workingmen  in  the  country  belonging. 

One  of  the  largest  of  these  societies  is  the  "  Forenigen 
Enighet  GerStyrka"  ("  In  union  there  is  strength").  It  is  thirty- 

187 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 

one  years  old  and  has  16,000  members.  These  pay  one  crown 
(27  cents)  per  month  and  50  ore  (13^  cents)  annually  in  addition. 
The  society  has  assets  of  over  600,000  crowns  ($162,000);  the 
income  for  its  last  fiscal  year  being  260,000  crowns  ($70,200) 
and  its  disbursements  over  221,000  crowns  ($59,670).  Man- 
agement expenses  were  only  21,461  crowns  ($5,748)  or  8.2 
per  cent  of  the  income.  The  society  employs  no  agents  or  can- 
vassers, new  members  being  obtained  through  the  introduction 
of  those  who  already  belong.  If  a  member  brings  in  twenty  ac- 
ceptable new  members  he  receives  10  crowns  ($2.70)  as  an  hono- 
rarium. 

The  society  gives  no  free  medical  service  and  benefits  are 
limited  to  12  crowns  ($3.24)  per  week  for  eight  weeks.  All 
payments  are  made  at  the  central  office,  no  collectors  being  em- 
ployed. There  is  no"karens"  or  waiting  period.  When  sick- 
ness is  reported,  an  inspector  is  at  once  sent  to  investigate  the 
condition  of  the  member.  Burial  benefits  are  granted  and  death 
benefits,  to  the  amounts  of  150  to  200  crowns  ($40  to  $54) 
depending  on  the  number  of  years  of  membership.  Wives  of 
members,  as  well  as  children  over  sixteen  years  of  age,  may 
join.  During  the  year  1907,  3525  members  received  sick  bene- 
fits for  a  total  of  12,138  weeks,  making  a  total  sick  disbursement 
of  145,656  crowns  ($39,327). 

There  is  also  a  so-called  pension  fund  in  the  nature  of  relief 
for  indigent  or  superannuated  members,  for  which  no  additional 
contributions  are  asked.  Contributions  are  required  up  to  the  age 
of  fifty-five,  after  which  they  are  paid  out  of  the  pension  fund. 
The  amounts  are  empirical  and  have  no  actuarial  basis.  To  meet 
the  expenses  of  this  fund,  an  initiation  or  admission  fee  of  three 
crowns  (81  cents)  is  charged  to  each  member.  In  addition,  each 
on  joining,  pays  50  ore  (13^  cents)  into  a  special  fund  to  be  used 
at  Christmas  to  assist  needy  members,  or,  as  stated  above,  to 
pay  their  dues  if  they  are  unable  to  do  so.  This,  however,  may 
not  be  done  in  any  case  for  more  than  six  months. 

These  friendly  societies  are  small  and  co-operative,  usually 
paying  relatively  large  sick  benefits  and  small  death  or  funeral 
benefits.  Some  furnish  medical  service,  medicines  or  even  nurses, 
surgical  appliances,  as  well  as  sick  benefits  for  a  limited  time. 

1 88 


DENMARK 


Their  unscientific  rates  render  them  unsound,  and  unless  they 
readjust  these  upon  an  adequate  basis  for  a  voluntary  system, 
or  insurance  is  made  obligatory,  many  of  them  must  fail. 


DENMARK 

Sickness  insurance  in  Denmark  is  still  under  the  provisions 
of  the  law  of  April  12,  1892.  This  grants  official  recognition 
and  a  state  subsidy  to  such  registered  mutual  sickness  insurance 
societies  as  comply  with  certain  exceedingly  simple  conditions. 
There  must  be  at  least  50  members.  The  society  may  be  organ- 
ized either  on  local  lines  or  by  industries,  the  maximum  age 
limit  at  entrance  being  forty;  and  no  person  may  be  a  mem- 
ber of  more  than  one  society.  There  is  no  medical  examina- 
tion and  even  persons  chronically  ill  may  be  admitted.  These, 
however,  are  not  entitled  to  benefits  for  such  illness. 

Members  and  their  children  under  fifteen  years  of  age  are 
entitled  to  medical  treatment.  Those  living  in  the  country 
may  obtain  free  transportation  to  physician  or  midwife.  In 
addition,  sick  benefits  are  paid  ranging  from  40  ore  (11  cents) 
per  day  for  those  living  in  the  country  to  a  maximum  of  two 
crowns  (54  cents)  for  men  in  cities,  such  as  Copenhagen.  The 
sum,  however,  is  limited  to  the  member's  average  daily  wages. 
During  recent  years  the  rate  of  sickness  has  varied  from  two 
days  per  man  per  annum  in  Jutland  to  over  six  days  in  Copen- 
hagen, calling  for  an  average  annual  payment  of  10  crowns 
($2.70)  per  member  throughout  the  kingdom.  To  meet  this 
there  was  an  income  of  1 1  crowns  ($2.97)  per  member,  to  which 
the  government  gives  as  a  subsidy,  two  crowns  per  member  and 
an  amount  equal  to  one-fifth  of  his  contribution.  The  govern- 
ment contribution  in  1907  was  about  2,000,000  crowns  (1540,000) 
to  about  1500  societies,  division  of  the  subsidy  being  propor- 
tioned to  the  number  of  members  and  their  contributions.  Mem- 
bership is  entirely  voluntary,  no  obligation  being  imposed  upon 
workingmen  or  their  employers  to  contribute. 

The  operation  of  the  law  has  been,  on  the  whole,  benefi- 
cent. On  January  i,  1907,  the  1500  societies  had  514,000  mem- 
bers aggregating  about  30  per  cent  of  the  adult  population.  A 

189 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

large  number  of  children,  also,  are  entitled  to  benefits.  Soci- 
eties are  supervised  by  a  state  inspector,  appointed  by  the  Minister 
of  the  Interior.  An  executive  committee  elected  by  the  soci- 
eties, with  the  state  inspector  as  chairman,  exercises  a  certain 
supervision  over  the  management.  The  inspector  also  each  year 
calls  the  delegates  of  the  various  clubs  together  in  joint  con- 
ferences. While  management  is  economical,  the  rates  and  meth- 
ods are  unscientific  and  unsound.  Practically  all  are  insolvent 
from  an  actuarial  standpoint  with  insufficient  funds  accumulated 
to  meet  their  claims  permanently.  This  has  already  shown 
itself  by  the  fact  that  several  societies  have  suspended.  Accord- 
ingly, under  the  advice  of  the  former  state  inspector  many  of 
them  have  joined  to  form  a  central  reinsurance  society,  by  means 
of  which  it  is  hoped  to  maintain  average  conditions  in  all.  A 
member  may  thus  pass  from  one  society  to  another,  without  re- 
examination  or  other  formality.  The  scheme  is  ingenious;  but 
there  are  many  difficulties  which  it  only  partially  overcomes. 

Newer  and  larger  societies  holding  aloof  from  this  federa- 
tion are  offering  much  lower  rates,  and  are  thus  rendering  the 
readjustment  and  conservation  of  older  societies  more  difficult  and 
precarious.  This  is  always  the  case  when  readjustments  are 
undertaken  from  necessity,  and  when  there  is  no  law  to  prevent 
younger  societies  from  continuing  with  inadequate  rates. 

The  most  important  of  these  latter  is  the  "Fremtiden," 
a  sickness  and  burial  society  not  affiliated  with  the  reinsurance 
scheme.  It  was  started  only  10  years  ago  and  has  a  young 
membership.  Like  many  others,  it  even  accepts  persons  who  are 
ill,  giving  no  benefit  for  the  sickness  present  at  the  time  of  en- 
trance. If  parents  are  members  of  the  society,  their  children 
likewise  are  insured;  15  crowns  ($4.05)  being  paid  at  the  death 
of  a  child  under  fifteen  years  of  age.  The  widow  of  a  member  is 
entitled  to  medical  treatment  and  to  the  burial  of  her  children 
until  she  remarries.  The  society  gives  additional  benefits  of  10 
crowns  ($2.70)  for  confinements,  and  double  this  amount  should 
there  be  twins.  This  applies  either  to  married  or  unmarried 
women. 

Every  effort  is  made  to  provide  good  medical  treatment 
for  members,  and  to  this  end,  the  society  engages  specialists 

190 


.  DENMARK 

and  consulting  physicians  for  severe  cases  of  disease,  particularly 
where  surgery  is  required.  Children  receive  free  medical  treat- 
ment if  both  parents  are  members  of  the  society;  if  only  one 
parent  is  a  member,  an  additional  premium  of  from  20  to  50  ore 
(5  to  13  cents)  monthly  is  charged  for  their  insurance.  For 
burial  benefits  the  charge  is  from  5  to  15  ore  (i  to  4  cents) 
monthly,  the  former  being  for  one  child,  and  the  latter  charge 
for  the  total  number  of  children. 

Applicants  are  admitted  between  the  ages  of  fifteen  and 
sixty.  The  society  is  growing  rapidly,  adding  about  400  new 
members  per  month.  At  the  end  of  1907  its  membership  had 
reached  21,589.  During  that  year,  the  average  sickness  was 
7.5  days  for  each  member  and  the  amounts  paid  averaged  a 
little  over  seven  crowns  ($1.89)  per  member  (men  9.3  crowns  and 
women  6.2  crowns).  The  income  of  the  society  for  the  year  was 
250,251  crowns  ($67,568)  from  members,  together  with  a  state 
subsidy  of  92,207  crowns  ($24,896),  making  a  total  income  of 
342,458  crowns  ($92,464) .  The  disbursements  for  sickness  amount- 
ed to  a  total  of  307,283  crowns  ($82,966)  divided  as  follows: 

TABLE   50. — SICKNESS  DISBURSEMENTS  OF  THE  "FREMTIDEN,"    1907 

Crowns 

Sick  benefits 140,949 

Baths,  bandages  and  confinements I2.374 

Medicines 5'»374 

Hospitals 29,358 

Doctors'  fees 73,228 

Total 307,283 

Funeral  expenses  were  paid  for  82  members  and  81  children. 
There  were  in  all  13,490  persons  insured  in  the  burial  fund. 

The  society  employs  collectors  who  visit  the  families  monthly 
and  receive  6  per  cent  commission.  Management  expenses  are 
13!  per  cent  of  the  premium  receipts,  exclusive  of  the  contri- 
bution made  by  the  state,  and  IOT\  per  cent  of  the  income  in- 
cluding the  latter.  Malingering  is  checked  by  special  inspectors 
who  visit  the  homes  and  report  each  suspicious  case  to  the  central 
office.  In  actual  practice,  the  member,  on  becoming  ill,  informs 
the  physician,  who  notifies  the  central  office.  The  inspector 
then  visits  the  home,  and  reports  to  the  central  office  upon  the 

191 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

worthiness  or  unworthiness  of  the  applicant  for  benefit.  The 
society  makes  a  contract  with  its  physicians,  and  as  no  agents 
are  employed,  it  is  through  the  former  principally  that  new 
members  are  obtained.  The  physician  receives  an  honorarium 
of  one  crown  (27  cents)  for  each  new  member,  and  three  crowns 
(8 1  cents)  per  annum  for  treating  the  members  of  a  family.  As 
elsewhere,  there  is  a  demand  on  the  part  of  specialists  for  higher 
rates  of  compensation. 

Some  of  the  older  sickness  insurance  societies  in  Copen- 
hagen find  it  impossible  to  compete  with  this  larger  society, 
owing  in  part  to  the  centralization  of  the  work  and  its  better 
service,  but  chiefly  to  its  lower  rates,  which  it  is  able  to  maintain 
at  present  because  it  is  a  young  society,  chiefly  with  young, 
recently  admitted  members. 

Associated  with  sickness  insurance  societies  are  a  large 
number  of  funeral  and  burial  organizations.  In  many  cases 
they  are  merely  adjuncts  to  the  former;  in  other  cases  they 
have  an  independent  existence.  Entrance  to  these  is  limited 
to  men  under  forty.  In  1905,  these  organizations  came  under  the 
control  of  the  state  and,  like  the  sickness  societies,  then  formed 
themselves  into  a  central  organization  in  which  they  reinsure 
certain  portions  of  their  risks.  To  obtain  admission  to  the 
larger  body,  the  individual  society  must  submit  to  the  control 
of  the  state  inspector  and  adopt  the  premium  rates  prepared  by 
him.  These  are  graded  according  to  age,  are  based  on  the 
state  mortality  tables,  and  are  for  ten-year  term  insurance. 
The  maximum  burial  benefit  is  150  crowns  ($40.50). 

Though  each  society  must  collect  assessments  equal  in 
the  aggregate  to  the  rates  prescribed,  it  may  and  often  does 
assess  each  member  alike.  Valuation  is  made  every  five  years 
and  if  insufficient  funds  are  on  hand,  premiums  are  increased. 
After  paying  claims  the  registered  societies  annually  turn  over 
their  surplus  income  to  the  central  body;  and,  if  there  be  a 
deficit  in  any  society,  the  general  reinsurance  fund  makes  it 
good.  No  attempt  has  as  yet  been  made  to  maintain  the  full 
reserve.  The  actual  funds  amount,  at  present,  to  500,000  crowns 
($135,000)  but  should  be  about  2,000,000  crowns  ($540,000). 

192 


HOLLAND 

HOLLAND 

There  is  no  state  provision  for  sickness  insurance  in  Holland. 
It  is  entirely  in  the  hands  of  mutual  societies  distributed  through- 
out the  country.  Though  the  origin  of  some  of  these  societies  is 
traced  back  to  sick  clubs  of  the  industrial  guilds  of  the  middle 
ages,  most  of  them  are  a  development  of  the  second  half  of  the 
nineteenth  century.  There  are  nearly  700  of  them  and  they  may 
be  divided  into  three  classes.  About  one-third  give  medical  treat- 
ment only;  more  than  half  pay  sick  benefits  only;  the  others  give 
both  medical  treatment  and  sick  benefits. 

One  association  has  more  than  100,000  members,  several 
exceed  10,000  each;  but  usually  the  societies  are  small  aggrega- 
tions of  workingmen  of  a  certain  locality  or  trade  associated  for  the 
purposes  of  mutual  protection.  In  many  cases  the  number  of 
beneficiaries  of  a  society  is  larger  than  the  number  of  members, 
since  payment  of  premiums  by  the  parent  provides  benefits  for 
the  sicknesses  of  wife  and  children  also.  Total  annual  premiums 
from  this  source  are  about  2,000,000  guilders  (f 800,000). 

In  societies  affording  medical  treatment,  as  a  rule,  mem- 
bership is  open  only  to  those  not  in  a  position  to  obtain  medical 
treatment  in  the  ordinary  way.  The  applicant  must  be  in  good 
health,  although  few  clubs  require  medical  examination.  Per- 
sons over  fifty  years  of  age  are  sometimes  admitted  though 
usually  not;  and  there  is  often  a  limit  upon  the  youngest  age. 
Dues,  payable  weekly,  average  from  10  to  12  cents,  and  in  most 
societies  are  the  same  for  all  ages.  Medical  treatment  is  given 
by  one  or  more  physicians  between  whom  the  members  may  choose, 
and  medicines  are  procurable  at  an  authorized  drug  store.  Chil- 
dren whose  parents  belong  usually  receive  treatment  free,  or 
reduced  premiums  are  paid  for  them  up  to  a  certain  age,  which 
varies  from  twelve  to  eighteen  years.  Frequently  these  societies 
are  business  enterprises,  set  on  foot  by  a  physician  or  druggist  or 
by  the  two  together.  A  few  of  the  larger  are  on  a  philanthropic 
basis;  and  the  management  may  be,  as  in  Amsterdam,  under  the 
supervision  and  direction  of  the  city  authorities.  They  usually  ac- 
cept members  only  between  the  ages  of  fifteen  and  sixty  years, 
requirements  for  admission  being  good  health  and  a  known  means 
>3F  193 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

of  support.  Many  give  benefits  not  only  for  sickness,  but  in  case 
of  death.  The  highest  weekly  cash  benefit  is  1 5  guilders  ($6.00) 
and  the  minimum,  one  guilder  (40  cents).  On  the  average,  the 
sum  of  five  guilders  ($2.00)  is  granted  for  13  weeks,  for  a  weekly 
premium  of  from  five  cents  to  ten  cents.  After  certain  ages, 
generally  thirty-five,  the  premium  in  some  societies  is  increased 
50  per  cent  every  five  years. 

Societies  or  funds  are  frequently  organized  by  trade  unions, 
by  unions  of  employers,  or  in  connection  with  industrial  estab- 
lishments. The  legal  form  is  either  a  stock  company,  a  frater- 
nity, or  simply  an  unincorporated  association.  In  addition,  there 
were,  in  the  year  1890,  416  factory  sick  funds,  with  52,000  mem- 
bers, usually  supported  by  joint  contributions  of  employers  or 
employes.  Many  proprietors,  however,  pay  sick  benefits  without 
contributions  from  employes.  Lacking  a  scientific  basis,  these  or- 
ganizations are  unsound  and  must  become  insolvent  if  continued 
on  a  voluntary  plan.  As  they  are  not  subject  to  state  supervision, 
their  management  sometimes  develops  arbitrary  methods,  and  the 
disappearance  of  officers  in  charge  of  their  funds  is  not  an  unusual 
occurrence. 

It  appears  from  the  above  that  universal  sickness  insurance 
in  the  Netherlands  is  still  far  from  complete.  This  condition  led 
the  administration,  on  November  17,  1904,  to  lay  a  bill  for  sick- 
ness insurance  before  the  Staten  Generaal.  The  bill  included  all 
over  sixteen  years  of  age  who  are  regularly  employed  at  less  than 
1 200  guilders  ($480)  a  year.  It  was  expected  to  give  benefits  not 
only  for  the  illness  of  the  workingman  and  his  wife,  and  children 
under  sixteen,  but  for  that  of  his  parents,  grandparents  and  par- 
ents-in-law if  they  lived  with  him  and  were  over  sixty-five  years 
of  age.  Insurance  was  to  be  carried  on  either  through  a  state,  a 
district  or  an  establishment  society,  the  state  and  district  societies 
to  be  conducted  by  the  communes  while  the  third  class  was  to  be 
for  workingmen  of  special  industrial  enterprises  only.  The  work- 
ingman was  given  the  right  to  select  the  society  he  would  join. 

Holland  was  for  this  purpose  to  be  divided  into  districts, 
each  having  at  least  50,000  inhabitants.  The  special  societies 
could  be  created  by  royal  consent  only.  Each  society  was  to  give 
medical  treatment,  together  with  sick  benefits,  up  to  a  maximum 

194 


HOLLAND 

of  1 80  days,  provided  the  workingman  was  incapacitated  by  illness 
for  at  least  two  days.  The  amount  of  benefit  was  to  vary 
from  35  to  70  per  cent  of  the  wages,  according  to  the  measure 
of  invalidity.  In  maternity  cases,  sick  benefits  were  to  be  given 
for  28  days  before  and  for  a  like  period  after  confinement.  Pre- 
miums to  be  paid  partly  by  the  employer  and  partly  by 
the  employe  were  to  be  based  on  the  wage  class  to  which  the 
workingman  belonged.  Owing  to  a  change  of  administration  in 
1905,  the  bill  failed;  but  a  second  bill  was  presented  on  September 
20,  1906.  It  was  drawn  practically  on  the  same  general  princi- 
ples; but  was  also  recalled,  leaving  the  situation  as  before. 

It  must  be  added  in  explanation  of  this  apparent  apathy 
on  the  part  of  the  legislature,  that,  in  a  certain  measure,  there 
is  already  provision  for  sickness  in  the  Netherlands.  Through 
the  poor  laws  of  1854,  the  communes  are  required  to  give  needy 
persons  free  medical  treatment.  In  Amsterdam,  out  of  a  popu- 
lation January  i,  1907,  of  564,194,  as  many  as  51,016  individuals, 
or  9y\  per  cent,  had  this  right  to  medical  treatment,  medicine, 
hospital  care  and  communal  support.  The  cost  to  the  com- 
munes, inclusive  of  hospital  treatment,  during  the  year  1905, 
amounted  to  228,200  guilders  ($91,280),  or  .1 1  guilders  (4^  cents) 
per  capita  of  the  population. 

A  good  example  of  a  sickness  insurance  society  in  Holland 
is  the  "Alegemeen  Ziekenfonds  voor  Amsterdam,"  established  in 
1847.  I*  nas  prospered  above  all  the  rest,  and  in  1907  had 
108,000  members,  including  38,521  children.  Dues  average  about 
10  cents  a  week  for  men  and  women  and  about  two  cents  for 
each  child  with  a  maximum  of  10  cents  for  all  the  children  of  a 
family.  This  premium  covers  only  medical  treatment,  medicines, 
trusses,  spectacles,  etc. 

In  addition,  the  society  has  a  special  department  in  which 
cash  benefits  of  60  cents  per  day  are  granted  in  event  of  sick- 
ness. To  be  admitted  the  applicant  must  be  examined  by  a 
physician  and  pay  an  additional  premium  of  10  cents  a  week. 
Admission  is  open  only  to  men  from  fifteen  to  fifty  years  of  age. 
Only  7400  members  belong  to  this  section,  the  rest  receiving 
medical  care  only.  Premiums  are  collected  by  agents  who  re- 

195 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

ceive  a  fixed  salary  of  from  10  to  15  guilders  ($4.00  to  $6.00) 
per  week,  and  in  addition  10  cents  for  each  new  member  se- 
cured. An  average  weekly  collection  is  from  350  to  400  guil- 
ders ($140  to  $  1 60). 

One  hundred  and  twelve  physicians  are  employed  by  the 
society,  the  member  having  choice  among  them.  The  surplus  at 
the  end  of  each  year  after  paying  all  expenses  is  divided  among 
the  physicians  and  druggists  under  contract  with  the  society.  For 
the  year  1907  receipts  from  all  sources  amounted  10401,355  guilders 
($160,542),  the  number  of  prescriptions  written,  to  933,998,  with 
a  total  cost  of  91,014  guilders  ($36,406);  cash  benefits  amounted 
to  2 58,602  guilders  ($103,441);  and  commissions  to  agents,  1036,268 
guilders  ($14,507). 

Another  society  of  interest  is  the  "Ziekenzorg  Hand- 
werkers  Vriendenkring"  with  a  membership  of  about  34,000. 
This  society  was  originally  started  by  Jewish  workmen  of  a  cer- 
tain trade  because  of  complaints  against  the  medical  treatment 
given  by  other  associations.  Following  the  method  in  vogue  in 
Leipzig,  physicians  are  paid  according  to  the  number  of  visits. 
Druggists  in  like  manner  are  paid  for  the  cost  of  drugs,  and  in 
addition,  are  compensated  for  putting  up  the  prescriptions.  Dues 
are  1 1  cents  a  week  with  two  cents  for  each  child,  and  a  maximum 
of  10  cents  for  all  the  children  in  a  family.  A  polyclinic  is  also 
conducted  which  to  all  intents  and  purposes  is  a  dispensary, 
where  members  are  given  medical  treatment.  In  the  sick  benefit 
department,  between  1500  and  1600  men  and  women  are  insured. 
Dues  here  are  from  10  to  15  cents  per  week  for  which  benefits  of 
from  4^  to  6  guilders  ($1.80  to  $2.40)  per  week  are  given  for  13 
weeks.  These  are  paid  even  if  the  member,  in  case  of  accident, 
receives  additional  compensation  from  an  accident  insurance 
company  or  employer.  Benefits  are  not  paid  for  cases  of  con- 
finement. 

Premiums  are  collected  by  agents,  who  receive  a  commis- 
sion of  30  cents  for  new  members  in  addition  to  a  fixed  weekly 
salary  of  16  guilders  ($6.40).  The  society  maintains  a  reserve 
fixed  by  its  own  by-laws,  by  no  means  adequate,  however,  for  an 
organization  operating  on  a  voluntary  basis. 

196 


HOLLAND 

Burial  societies  are  even  more  popular  than  sickness  societies 
among  Dutch  workingmen  who  receive  small  wages.  It  is  esti- 
mated that  one-half  of  the  population,  namely,  2,500,000  persons, 
are  members  of  such  organizations,  exclusively  the  result  of  pri- 
vate initiative.  For  a  monthly  premium  they  guarantee  a  sum 
at  the  death  of  the  member,  in  many  cases  barely  the  cost  of 
burial.  As  early  as  1890,  there  were  433  such  associations,  of  which 
nearly  half  were  private.  About  the  same  number  had  sickness 
insurance  societies  attached  to  them.  A  few  were  burial  societies 
of  trade  unions.  About  one-fifth  carried  their  activities  over  the 
entire  country,  nearly  all  the  others  being  local.  Many  are  very 
large;  five  had  more  than  100,000  members  each,  and  fully  50  had 
more  than  5000.  There  is  one  such  society  for  every  10,406 
inhabitants. 

The  burial  societies  for  a  fixed  level  premium  during  life 
insure  a  definite  sum  in  case  of  death.  Many,  in  addition,  pay 
a  so-called  "Freie  Leistung";  that  is,  a  sum  at  the  death  of  a 
minor  child,  if  both  parents  are  living  and  insured  with  it.  Not 
less  than  58  per  cent  of  the  342  societies  whose  rates  were  investi- 
gated, require  the  same  premiums  without  regard  to  age.  In  a 
few  of  the  large  organizations  a  fixed  premium  is  charged,  graded 
according  to  age  at  entry,  but  these  are  all  much  lower  than  in 
life  insurance  companies.  In  the  burial  societies  with  Freie 
Leistung,  the  premiums  have  no  scientific  basis,  being  the  same 
as  in  societies  which  do  not  give  these  benefits.  Naturally, 
married  couples  chiefly  form  the  membership  of  such  an  organi- 
zation; yet  it  is  remarkable  that  none  of  these  clubs  makes  any 
attempt  to  ascertain  the  number  of  children  per  member,  al- 
though they  are  insured  by  the  society  along  with  their  parents. 

A  few  financial  items  will  be  of  interest.  The  433  societies 
comprise  over  2,212,000  members,  or  about  50  per  cent  of  the 
entire  population,  insuring  them  for  an  aggregate  of  130,950,000 
guilders  ($5 2, 380,000), or  approximately  60  guilders  ($24)  per  mem- 
ber. The  premium  income  per  annum  is  estimated  to  amount 
to  4,150,000  guilders  ($1,660,000).  On  an  average  the  societies 
are  paying  over  2,000,000  guilders  ($800,000)  in  death  claims; 
expenses  are  about  1,450,000  guilders  ($580,000);  aggregate 
assets  are  about  12,500,000  guilders  ($5,000,000).  On  the  as- 

197 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

sumption  that  the  funds  earn  interest  at  3!  percent  per  annum,  the 
total  income  is  estimated  at  4,500,000  guilders  ($1,800,000),  and 
the  total  disbursements  at  3,400,000  guilders  (11,360,000),  leav- 
ing an  annual  surplus  available  for  investment  of  1,100,000 
guilders  ($440,000).  As  the  premiums  are  known  to  be  too  low, 
this  surplus  must  inevitably,  unless  compulsory  membership  is 
introduced,  gradually  disappear  and  be  replaced  by  large  deficits. 

The  legal  character  of  the  burial  societies  differs  widely. 
Some  are  a  continuation  of  the  middle  age  guilds,  and  should 
really  be  looked  at  in  the  light  of  endowments.  Their  manage- 
ment is  under  the  supervision  of  the  state  authorities.  Others 
are  private  undertakings.  Still  others  are  societies  with  limited 
liability  formed  under  the  business  corporation  laws.  In  all, 
there  is  little  or  no  control  by  members,  this  being  at  present 
almost  entirely  vested  in  the  managers.  As  a  result,  the  soci- 
eties are  mere  sources  of  income  for  the  latter.  Owing  to  this 
want  of  supervision,  as  in  the  case  of  some  of  the  British  friendly 
societies,  risks  have  been  assumed  which  were  not  warranted. 
Persons  have  been  accepted  for  membership  who  under  the  rules 
were  not  admissible,  and  afterwards,  although  they  had  paid 
premiums  for  some  time  were  stricken  from  the  rolls.  In  places 
where  losses  exceeded  premiums  and  where  little  new  insurance 
was  being  obtained,  agents  were  withdrawn,  and  as  members  did 
not  know  where  to  pay  premiums,  their  rights  were  lost  by  lapse. 
It  has  been  found,  also,  that  where  burial  societies  were  most 
active,  infantile  mortality  was  highest  and  that  it  was  common 
for  parents  to  insure  their  ailing  children.  Absence  of  medical 
examination  was  largely  responsible  for  this. 

Until  1891  there  was  no  state  supervision  of  these  soci- 
eties. The  report  of  the  Society  for  Improving  Public  Welfare 
for  the  year  1888  showed  evils  so  great  that  the  government, 
on  April  4,  1892,  appointed  a  special  commission  to  present  a 
bill  for  the  regulation  of  burial  and  similar  societies.  It  reported 
February  27,  1897.  According  to  its  recommendations,  only  in- 
corporated societies  were  to  be  permitted  to  furnish  such  insur- 
ance; they  should  be  registered  and  required  to  report  under 
what  conditions  persons  might  become  members;  how  the  officers 
and  directors  should  be  elected  or  appointed  and  by  whom,  and 

.98 


BELGIUM 

what  provision,  if  any,  would  be  made  for  the  distribution  of 
assets  upon  dissolution.  Each  society,  with  the  exception  of  those 
formed  by  trade  unions,  was  to  be  required  to  deposit  a  guarantee 
of  50,000  guilders  ($20,000)  with  the  state.  The  annual  report 
should  be  open  for  inspection  and  should  contain  a  full  statement 
of  the  society's  financial  condition  and  of  its  transactions.  The 
commission  also  recommended  that  a  central  inspection  commis- 
sion supervise  all  such  organizations.  No  practical  results  appear 
to  have  followed  these  recommendations. 


BELGIUM 

In  Belgium,  sickness  insurance  has  followed  the  course 
taken  by  France.  In  1851,  one  year  after  the  passage  of  the 
French  law  for  the  encouragement  of  sickness  relief  societies,  a 
similar  measure  "recognizing"  friendly  societies  was  adopted 
in  Belgium.  These  insured  their  members  against  sickness, 
accident,  invalidity,  and  death.  To  such  as  complied  with  cer- 
tain conditions,  the  state  granted,  among  other  things,  the  right 
to  sue  and  be  sued,  exemption  from  certain  taxes,  etc.;  but 
these  privileges  were  deemed  so  unimportant  that  only  a  few 
societies  took  advantage  of  them.  In  1861,  in  order  further  to 
encourage  the  development  of  this  form  of  insurance,  a  provision 
was  made  by  the  government  for  triennial  competitions  among 
societies,  prizes  being  offered  to  those  showing  the  best  results; 
and  in  1887  committees  were  appointed  in  the  various  provinces 
to  encourage  the  establishment  and  development  of  new  friendly 
societies.  All  of  these  attempts,  however,  proved  futile.  While 
most  of  the  sickness  insurance  societies  consented  to  register, 
there  was  no  great  inclination  to  do  so.  This  was  particularly 
noted  by  a  commission  appointed  to  study  the  general  condition 
of  workmen.  Its  report  deplored  the  fact  that  the  attempt  to 
establish  sickness  insurance  societies  had  been  an  entire  failure, 
that  the  plans  of  the  societies  were  unscientific,  and  their  finan- 
cial condition  unsatisfactory.  It  also  showed  that  unattached 
workingmen,  as  well  as  those  engaged  in  agriculture,  were  practically 
without  insurance  in  friendly  societies  and  that  a  state  subven- 
tion was  needed. 

199 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 

At  the  present  time,  sickness  insurance  is  regulated  by 
a  law  passed  June  23,  1894.  Only  "registered"  societies  are 
"recognized."  The  scope  of  their  operations  is  defined,  in  part, 
as  follows:  (i)  The  payment  of  sickness  and  burial  benefits,  the 
temporary  assistance  of  families  of  disabled  members,  and  the  aid- 
ing of  members  and  their  dependents  to  make  use  of  the  govern- 
mental savings  and  annuity  bank;  (2)  cattle  and  crop  insurance; 
(3)  encouragement  of  savings;  (4)  granting  loans  to  members, 
not  to  exceed  300  francs  ($60)  to  each.  "Recognition"  carries 
with  it,  as  has  been  said,  the  right  to  sue  and  be  sued 
and  exemption  from  taxation,  as  well  as  a  state  subvention. 
Such  societies  may  also  form  federations.  Their  investments 
are  subject  to  state  supervision,  but  the  management  is  auton- 
omous. The  dissolution  of  a  "registered"  society  can  take  place 
only  upon  a  judicial  decision,  and  only  when  the  society 
has  exceeded  its  powers  or  is  unable  to  pay  its  debts.  In  spite 
of  much  recent  encouragement,  the  number  of  friendly  soci- 
eties is  still  comparatively  small.  In  1907,  there  were  in  all 
3330  associations,  with  a  membership  of  400,000.  When  it 
is  considered  that  Belgium  has  a  population  of  7,300,000,  of 
whom  about  1,200,000  are  wage-earners,  it  is  clear  that  a  large 
number  of  workingmen  are  still  unprovided  for.  In  1904,  the  total 
assets  of  2256  registered  societies  with  254,132  members  amounted 
to  7,600,000  francs  ($  1,520,000);  receipts  for  the  same  year 
amounted  to  3,900,000  francs  ($780,000)  and  expenses  to  3,400,000 
francs  (|68o,ooo). 

Very  little  can  be  said  about  the  unregistered  societies. 
There  are  approximately  800  of  them  with  a  membership  of 
50,000.  Their  management  is  unrestricted;  they  make  no  re- 
ports to  the  government  and  receive  no  state  subvention. 

There  are  also  organizations  of  civil  servants,  created 
in  1859  by  imperial  decree,  which  include  pension  and  sickness 
insurance  societies  for  workmen  on  the  Belgian  state  railways,  as 
well  as  friendly  societies  for  miners.  Besides  sickness  insurance, 
these  organizations  supply  accident,  old  age  and  invalidity  in- 
surance. 

The  law  of  March  31,  1898,  which,  like  the  French 
syndicate  law  of  1884,  gave  the  trade  unions  large  recognition 

200 


FRANCE 


and  standing,  has  not  brought  about  any  noticeable  develop- 
ment of  workingmen's  insurance  in  the  various  trade  unions 
of  Belgium. 


FRANCE 

Until  recently,  legislation  in  the  field  of  workingmen's 
insurance  in  France  was  subject  to  ideas  resulting  from  the 
Revolution.  Following  the  traditional  individualistic  principles 
of  the  Roman  law,  the  struggle  against  need  was  left  to  voluntary 
individual  or  collective  effort.  In  spite  of  this,  the  influence  of 
the  German  insurance  system  slowly  began  to  make  itself  felt, 
the  interest  of  the  state  was  awakened,  and  today  one  may  ob- 
serve in  this  country  a  strong,  uniform  and  progressive  move- 
ment in  this  direction. 

Soon  after  the  Revolution,  mutual  sickness  societies  began 
to  be  organized  and  replaced  the  old  trade  guilds,  which  were 
forbidden  by  law.  At  first,  these  societies  were  eyed  with  sus- 
picion by  the  authorities;  but  later,  when  it  was  seen  that  they 
supplied  a  genuine  want  in  the  lives  of  workingmen  and  were 
not  dangerous  to  public  order,  they  were  openly  countenanced. 
As  the  political  power  of  workingmen  increased,  their  societies  grew 
in  members  and  strength;  and  by  1847,  there  were  2056  of  them 
with  total  funds  of  5,720,000  francs  ($1,144,000).  From  the 
beginning  these  organizations  aimed  to  give  benefits  to  their 
members  in  certain  exigencies.  They  were  of  small  membership 
and  without  systematic  management.  Unregulated  by  law  or 
the  principles  of  actuarial  science,  they  made  little  distinction  be- 
tween the  various  types  of  insurance  and  granted  sick  benefits, 
funeral  benefits,  invalidity  and  old  age  pensions.  Because  of 
insufficient  contributions  they  were  constantly  going  to  the  wall. 
The  necessity  to  regulate  and  supervise  them  soon  became 
evident,  as  did  also  the  need  of  encouraging  and  supporting 
workingmen's  insurance  by  governmental  means. 

A  law  enacted  in  1834  had  already  recognized  so-called 
"free  societies"  which  obtained  a  permit  from  the  authorities. 
They  were  known  as  "societes  autorisees,"  but  had  no  special 
powers  and  no  legal  standing.  To  improve  their  status,  and  to 

20 1 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

correct  the  situation  noted  above,  the  law  of  1850  was  passed. 
It  established,  alongside  of  these  "authorized"  societies,  a  group 
of  "recognized"  societies  (Soce'tie's  reconnues  comme  etablisse- 
ments  d'utilit£  publique),  whose  purpose  was  to  encourage  the 
granting  of  temporary  assistance  to  disabled  members,  as  well 
as  the  payment  of  burial  benefits.  To  these  certain  privileges 
were  given,  such  as  a  legal  status  and  freedom  from  taxation, 
subject  to  certain  restrictive  conditions. 

This  law  was  ineffective,  and  in  consequence  a  decree  of 
1852  established  a  third  class  "Societes  de  secours  mutuels  ap- 
prouves"  or  "approved"  societies  whose  object  was  also  to  give 
relief  to  incapacitated  members  and  to  furnish  burial  benefits. 
Old  age  benefits  could  be  given  only  if  the  society  had  a  certain 
number  of  honorary  members,  that  is  contributing  "patrons,"  who 
drew  nothing  in  return.  The  by-laws  of  each  society  were  sub- 
ject to  approval  by  the  authorities;  and  an  approved  society 
could  sue  and  be  sued,  was  exempt  from  taxation,  and  was  en- 
titled to  a  free  meeting  place  and  to  have  its  accounts  kept 
by  the  commune.  These  latter  privileges  were  also  given  to 
recognized  societies. 

The  approved  societies  receive  the  greatest  encouragement. 
They  obtain  aid  of  various  sorts  from  the  municipality,  enjoy 
two  sorts  of  subvention  from  the  government,  have  the  right 
to  deposit  their  funds  with  the  Caisse  Nationale  de  Depot, 
a  government  department,  and  to  receive  interest  at  4^  per 
cent  per  annum,  although  the  government  can  command  all 
the  money  it  wants  at  3  per  cent  or  less.  In  addition,  they 
receive  subventions  directly.  In  return  for  these  advantages 
approved  societies  must  submit  to  regulation  by  prefects  and 
by  the  Minister  of  the  Interior,  make  annual  reports  of  their 
financial  condition,  supply  sickness  and  other  statistics,  and 
if  they  furnish  annuities  submit  a  valuation  every  five  years  at 
least. 

An  interesting  development  of  the  approved  societies  took 
place  in  the  nineties.  As  in  other  countries,  a  large  number  of 
children  had  always  been  insured  in  these  societies  together  with 
their  parents.  The  children  could  not,  however,  have  much 
sense  of  personal  responsibility,  often  being  unaware  of  the  fact 

202 


FRANCE 

that  they  were  members.  Under  the  auspices  of  certain  public 
spirited  citizens,  and  with  the  co-operation  of  school  teachers,  a 
plan  was  developed  for  the  direct  enrollment  of  pupils  in  soci- 
eties of  their  own.  Boys  and  girls  between  the  ages  of  six  and 
sixteen  thus  learn  to  save  money  for  old  age,  and  to  provide 
against  disability  by  means  of  insurance.  At  sixteen  they  are 
enrolled  in  adult  societies.  This  early  membership  is  a  great 
advantage,  for  to  begin  in  advanced  years  to  provide  for  an 
old  age  annuity  is  difficult,  as  sickness  and  disability  premiums 
almost  entirely  absorb  the  contributions  a  wage-earner  is  able 
to  make. 

In  1898,  therefore,  three  types  of  societies  existed;  the 
authorized,  the  recognized,  and  the  approved.  In  that  year  a 
law  was  enacted  whereby  the  authorized  societies  were  replaced 
by  the  so-called  "societes  libres,"  free  or  unregistered  societies, 
from  which  many  disabilities  were  removed;  the  recognized 
societies  were  also  combined  with  approved  societies  and  sub- 
jected to  the  same  regulations  and  supervision.  At  the  present 
time,  all  mutual  sickness  insurance  societies  in  France  are  of  one 
of  two  categories,  approved  or  free,  corresponding  to  registered 
and  unregistered  in  England. 

The  new  law  aims  to  enlarge  the  sphere  of  mutual  sick- 
ness insurance  societies,  to  put  them  upon  an  actuarial  basis,  and 
at  the  same  time  to  extend  the  supervisory  powers  of  the  govern- 
ment. Official  "authorization"  is  no  longer  necessary  to  estab- 
lish a  society;  but  the  proposed  by-laws  over  the  signatures  of 
the  executive  committee  must  be  submitted  for  approval.  Soci- 
eties are  granted  corporate  existence  but  with  strictly  limited 
powers.  They  may  undertake  any  form  of  insurance  authorized 
by  law,  and  are  no  longer  required  to  deposit  their  assets  with  the 
government,  or  to  purchase  their  annuities  of  the  government. 
If  they  do  neither  they  may  invest  their  funds  up  to  but  not 
to  exceed  three-fourths  of  their  assets  in  real  estate  and  real 
estate  mortgages.  They  may  form  federations  for  mutual  pur- 
poses, distributing  among  constituent  societies  the  burden  of 
each,  thus  securing  a  basis  large  enough  to  furnish  reliable  aver- 
ages, and  permitting  free  movement  of  members  from  one  dis- 
trict to  another  without  loss  of  privileges. 

203 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 


The  following  tables  will  show  the  growth  in  number  of 
the  two  types  of  societies,  approved  and  free,  since  the  establish- 
ment of  the  law  of  i! 


TABLE    51. — NUMBER  OF  FREE  AND   APPROVED    SOCIETIES, 
1898-1908 


Societies 

1898 

1903 

1904 

1907* 

1908* 

Approved  for  adults    .... 
Approved  for  school  children    . 

8,39  1 
181 

1  1,205 
1,907 

11,892 

2,1  19 

13-700 

2,  IOO 

14,400 
2,100 

Total  approved  societies    . 
Free       

8,572 

3>253 

13,112 
3,203 

14,011 
3,221 

15,800 
3.7OO 

16,500 

3.7OO 

Total  all  societies 

11,825 

16,315 

17,232 

19,50° 

20.2OO 

*  Figures  for  number  of  societies  1907  and  1908  represent  preliminary  esti- 
mates only. 


The  reported  membership  was  as  follows: 


TABLE    52. — MEMBERSHIP    OF   FREE   AND  APPROVED    SOCIETIES, 

1898-1907 


NUMBER  OF  MEMBERS 


Societies 

1898 

1903 

1904 

1907* 

Approved  for  adults 
Active  members  . 
Honorary  members     . 

Approved  for  school  children   . 
Active  members  .... 
Honorary  members    . 

Total  in  all  approved  societies  . 

Free 
Active  members  .... 
Honorary  members    . 

Total  in  free  societies 

',279,358 
244,632 

',770,772 
3'3>455 

2,037,377 
341,247 

2,951,  ooo  f 
410,000 

%% 

606,632 
46,881 

665,000 
05,000 

1,523,990 

2,693,941 

3,032,137 

4,091,000 

35'-544 
33,935 

403,678 
36,224 

419,910 
36,37' 

554,000 
35,000 

385,479 

439,902 

456,281 

589,000 

Total  in  all  societies 

1,909,469 

3,133.843 

3,488,418 

4,680,000 

*  Figures  for  number  of  members  1907  represent  preliminary  estimates  only, 
f  Including  370,000  children. 

204 


FRANCE 

I 

Under  the  influence  of  the  law  of  1898  the  number  of 
societies  has  almost  doubled.  Statistics  of  the  number  of  mem- 
bers in  these  societies  are  incomplete,  because  not  all  are  reported 
to  the  ministry.  Consequently,  Table  52  applies  only  to  11,451 
approved  societies  for  adults,  2029  approved  societies  for  school 
children,  and  2977  free  societies.  From  the  foregoing  figures  it 
will  be  seen  that  "honorary  members"  play  an  important  part. 
They  are  usually  men  of  means  who  give  largely  both  of  time 
and  money.  Recently,  too,  their  numbers  have  grown  remarkably. 
In  1898  there  were  275,000;  at  the  end  of  1904,  425,000;  and  at 
the  beginning  of  1907,  the  number  had  reached  510,000.  In 
France,  nearly  every  benevolently  inclined  person  in  a  community 
is  an  honorary  member  of  one  or  more  such  societies. 

The  large  number  of  young  people  is  also  worthy  of  notice. 
Of  the  4,170,000  active  members,  no  less  than  1,065,000,  or 
over  25  per  cent,  were  children.  About  370,000  are  insured  with 
their  parents,  but  no  fewer  than  665,000  are  independent  members, 
belonging  to  school  children's  societies.  Much  of  this  remark- 
able growth  is  due  to  the  interest  taken  by  teachers,  and  through 
their  efforts  the  future  of  all  societies,  both  junior  and  adult, 
would  seem  to  be  assured.  The  great  strength  of  these  organiza- 
tions is  shown,  not  only  by  the  large  number  of  members,  but 
by  the  immense  amount  of  funds  amassed.  This  amounted  at 
the  close  of  1904  to  352,493,520  francs  ($70,498,704)  in  the  case 
of  approved  societies  for  adults;  to  7,299,065  francs  ($1,459,813) 
in  the  case  of  approved  societies  for  school  children;  and 
45,846,844  francs  ($9,169,369)  in  the  case  of  free  societies,  or  a 
total  of  405,639,429  francs  ($81,127,886). 

Employers  contribute  only  when  the  societies  are  founded  in 
connection  with  a  particular  establishment.  Nearly  all  are,  there- 
fore, entirely  controlled  by  their  members  who  contribute  monthly 
premiums,  usually  of  one  franc.  The  sum,  however,  varies  with 
the  character  of  the  society  and  the  nature  and  amount  of  its 
benefits.  When  the  wife  and  children  are  insured  with  the  hus- 
band, an  additional  contribution  is  required.  Tables  53  and  54 
on  the  following  pages  show  the  income  of  these  societies  from 
members,  subventions  and  other  sources  as  well  as  their  bene- 
ficiaries. 

205 


INSURANCE   AGAINST  SICKNESS   AND   DEATH 


TABLE    53. — INCOME   OF  APPROVED    AND   FREE    SOCIETIES, 
1898,    1903,    1904 


APPROVED  SOCIETIES  FOR  ADULTS 


Premiums  of  active  members 
Premiums  of  honorary  members  . 
Subventions,  gifts  and  legacies     . 
Other  receipts         .... 
Interest 


1898 
(Francs) 
17,890,204 
2,568,449 
2,253,217 
2,594,969 
3,670,175 


1903 

(Francs) 
23,999,813 
3,306,106 
2,938,841 
4,429,077 
5,868,725 


Total 


APPROVED  SOCIETIES  FOR  SCHOOL  CHILDREN 


Premiums  of  active  members 
Premiums  of  honorary  members 
Subventions,  gifts  and  legacies 
Other  receipts 
Interest 


2,549,304 
134.700 
205,209 
131,494 
101,930 


Total     »      ..      .„.      ,      , 3,122,637 


Premiums  of  active  members 
Premiums  of  honorary  members 
Subventions,  gifts  and  legacies 
Other  receipts    .... 
Interest 


FREE  SOCIETIES 

5.222,335 
389,374 
1,302,760 

921,365 
1,460,402 


5.552.786 


1,542,394 
2,019,678 
1,529,739 


Total 


1904 
(Francs) 
25,323,423 
3-374.709 
3,070,832 
4,931.883 
5,958,269 


28,977,014        40,542,562        42,659,176 


2,772.546 
136,256 
250,255 
'77.825 
"5.958 

3,452,840 


5.697.379 
5'3.399 
1,459,695 
2,108,419 
1,518,905 


9,296,236         11,102,015         11,297,797 


TABLE    54. NUMBER   OF    BENEFICIARIES   OF    APPROVED    AND    FREE 

SOCIETIES,     1904 


APPROVED  SOCIETIES  FOR  ADULTS 


Sick 

Old  age  pensioners  from  the  common  fund 
Pensioners  who  have  received  aid  from  the  free  fund 
Beneficiaries  at  death  of  members        .... 

Dead  with  funeral  expenses 

Widows  and  orphans 

Aged 

Cripples  and  chronically  sick 


Number  of 

Beneficiaries 

446,392 

66,519 

55.339 

415 

19,329 

9,520 

6,044 

4.420 


Total 607,978 


APPROVED  SOCIETIES  FOR  SCHOOL  CHILDREN 

Sick 

Dead  with  funeral  expenses 


Total 


206 


65,803 
'52 

65.955 


FRANCE 

FREE  SOCIETIES 

Number  of 
Beneficiaries 

Sick 99,550 

Pensioners 9,124 

Dead  with  funeral  expenses 3,058 

Widows  and  orphans      • 2,027 

Aged 1,719 

Cripples  and  chronically  sick 935 

Total 116,413 

ALL  SOCIETIES 

Number  of 
Beneficiaries 

Sick 611,745 

Pensioners 130,982 

Dead  with  funeral  expenses 22,539 

Beneficiaries  at  death  of  members 415 

Widows  and  orphans ",547 

Aged 7,763 

Cripples  and  chronically  sick 5>355 

Total 790,346 

There  are,  therefore,  at  the  present  time  not  less  than 
1,000,000  persons  receiving  benefits.  Toward  providing  these, 
the  approved  societies,  as  has  already  been  pointed  out,  obtain 
subventions  from  the  state.  Thus  in  1903  they  received  from  the 
communes  and  departments  827,000  francs  ($165,400);  from  the 
state,  to  those  societies  which  provide  old  age  pensions,  350,000 
francs  ($70,000);  and  from  the  state  for  old  age  pensions  4,871,000 
francs  ($974,200);  or  a  total  of  6,048,000  francs  ($1,209,600). 
The  management  expenses  of  the  approved  societies  for  adults 
were  1,724,115  francs  ($344,823),  or  5.2  per  cent  of  all  expendi- 
tures; of  approved  societies  for  school  children  130,063  francs 
($26,013),  or  4-55  Per  cent>  and  for  free  societies  564,704  francs 
($i  12,941),  or  6.6  per  cent. 

Sickness  insurance  is  the  chief  business  of  these  mutual 
societies,  at  least  90  per  cent  of  them  giving  sick  benefits  either 
exclusively,  or  accompanied  by  some  other  form  of  benefit.  The 
following  statistics  will  bring  out  the  esential  facts  concerning 
sickness  insurance  benefits: 


207 


INSURANCE  AGAINST  SICKNESS  AND  DEATH 


TABLE  55. — CHARACTER  AND  VALUE  OF  BENEFITS  PAID  BY 
APPROVED  AND  FREE  SOCIETIES,  1904 


APPROVED  SOCIETIES  FOR 

Free 
Societies 

Adults 

School 
Children 

Societies  paying  physicians'  fees    .     . 
Societies  paying  cost  of  medicines 
Societies  paying  sick  benefits  in  cash  . 
Number  of  sick    
Members  receiving  sick  benefits  in  cash 
Days  of  sickness  

7,860 

7'$5 
5,885 

446,392 
278,352 
7,187,441 

109 
74 
>'7' 
65,803 

63i5! 
1,431,636 

0.46 
10.44 

8,623 
9,067 
659,583 

I>5^ 
1,466 

2,680 

99.95° 
72,844 

1.456.935 

600,029 
492,457 
2,197.297 

Sick  benefit  per  sick  day  (Francs) 
Sick  benefit  per  sick  member  (Francs')   . 

Cost  of  medical  attendance  (Francs')   . 
Cost  of  medicines  (Francs) 
Sick  benefits  paid  in  cash  (Francs) 

1.14 
29.30 

4,064,152 

4.765.164 
8,169,047 

Total  benefits  paid  (Francs)    . 

16,998,363 

677.273    1  3.589.783 

Sickness  insurance  societies  are  in  most  cases  small,  per- 
haps not  more  than  100  having  over  300  members.  Usually  they 
are  composed  of  groups  of  persons  brought  together  by  local  or  trade 
connections.  With  few  exceptions  they  have  made  no  attempt 
to  employ  agents,  either  to  increase  their  membership  or  to  col- 
lect dues. 

Typical  of  the  larger  mutual  organizations  is"L'Union  du 
Commerce."  It  has  23,000  members,  mostly  clerks  in  stores  in 
Paris,  and  is  growing  rapidly.  Membership  is  open  to  all  and  no 
medical  examination  is  required  of  entrants  under  thirty.  Dues 
are  two  francs  (40  cents)  per  month,  which  entitles  the  member, 
in  case  of  sickness,  to  medical  aid,  medicines,  and  a  sick  benefit 
of  two  francs  a  day  for  a  period  not  to  exceed  60  days,  and  to  one 
franc  a  day  for  a  period  not  to  exceed  30  days.  The  member 
may,  instead  of  a  cash  benefit,  elect  to  receive  hospital  treat- 
ment at  the  society's  expense.  He  must  be  treated  by  the 
physician  employed  by  the  society  who  is  nearest  at  hand,  but 
under  certain  conditions  as  to  compensation  to  be  paid  by  the 
society,  may  employ  his  own  doctor.  In  a  case  of  tuberculosis 
arrangement  is  made  for  admission  to  a  sanatorium.  No  medical 
treatment  is  given  either  to  the  wife  or  children  of  a  member,  un- 

208 


FRANCE 

less  they  themselves  belong  and  contributions  are  made  for  them. 
Children  over  seven  pay  one  franc  (20  cents)  per  month,  but  are  not 
entitled  to  cash  benefits  during  sickness.  In  addition  to  sick 
benefits,  an  old  age  annuity  is  payable  to  members  over  sixty, 
provided  they  have  been  in  good  standing  for  at  least  15  years. 
The  society  employs  no  agents  and  pays  no  commissions.  New 
members  are  introduced  by  those  who  already  belong.  Dues  are 
in  most  cases  collected  by  employes  who  receive  a  monthly  salary; 
in  large  establishments  an  employe  is  appointed  to  collect  dues 
from  other  employes  or  very  often  the  employer  himself  acts  in 
this  capacity  for  a  consideration. 

L' Union  du  Commerce,  like  other  societies  of  this  class, 
receives  10,000  francs  (|2ooo)  a  year  from  the  state.  It  also 
receives  a  large  income  from  its  400  honorary  members,  and  is 
thus  enabled  to  pay  funeral  benefits  to  the  amount  of  240  francs 
($48).  In  addition,  the  widow  if  in  need  may  be  paid  from  50 
to  100  francs  ($10  to  $20).  Benefits  in  some  cases  are  paid  to 
children  for  purposes  of  education.  There  is  no  insurance  against 
unemployment,  but  the  society  occasionally  advances  money  to 
members  at  such  a  time. 

There  are  also  sickness  insurance  societies  under  the  man- 
agement of  some  of  the  communes,  membership  in  which  is 
voluntary.  Investigation  shows  that  few  workingmen  belong, 
members  for  the  most  part  being  small  proprietors,  self-employed 
workmen,  clerks  and  salesmen.  No  agents  are  employed,  but  the 
societies  advertise  in  the  newspaper.  In  each  arrondissement  of 
Paris,  for  example,  there  is  such  an  organization  under  the  direc- 
tion of  the  mairie,  which  any  one  of  good  character  may  join. 
The  number  of  members  is  still  small.  In  the  ninth  arrondissement, 
with  a  population  of  about  100,000,  membership  in  1907  amounted 
to  only  1886,  which  included  honorary  members,  who  also  play  a 
most  important  part  in  the  affairs  of  these  societies.  Admission, 
subject  to  medical  inspection,  is  open  to  both  sexes  from  the  age 
of  two  to  forty-five  upon  the  payment  of  an  entrance  fee  of  one 
franc  upwards  according  to  age.  The  table  on  the  following 
page  will  show  the  monthly  dues,  which  must  be  paid  at  the 
central  office. 

14  F  209 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

TABLE     56. — MONTHLY    DUES     CHARGED    BY    COMMUNAL    SICKNESS 
INSURANCE    SOCIETIES 


Age  at  Entrance 

Men 
(Francs) 

Women 
(Francs) 

2  to  16 

0.75 

0.75 

l6  to  20 

2.25 

1.25 

21  tO  25 

2.50 

1.50 

26  to  30 

2.70 

1.60 

31  to  35 

2.80 

i.  80 

36  to  40 

3.00 

2.OO 

40  to  45 

5.00 

5.00 

In  case  of  sickness,  the  society  grants  medical  aid  as  well 
as  a  benefit  of  two  francs  (40  cents)  per  diem  for  men  and  one  franc 
(20  cents)  for  women.  Admission  to  a  convalescents'  home  is  also 
provided  for  both  men  and  women.  There  are  no  fixed  pensions 
for  old  age. 

Trade  associations,  the  so-called  "syndicats  professionels," 
also  play  an  important  part  in  workingmen's  insurance.  These 
associations  were  for  a  long  time  revolutionary  in  character  and 
under  the  ban  of  the  law.  Later  the  conservative  element  in 
them  saw  that,  if  they  were  to  increase  in  membership  and  extend 
their  usefulness,  they  must  modify  their  plan  of  organization 
and  offer  attractive  benefits.  This  policy  was  adopted  by  a 
majority  of  the  societies  and  in  consequence  the  law  of  1884  re- 
pealed all  previous  legislation  restricting  the  powers  of  the  "  syndi- 
cats professionels  "  in  respect  to  granting  benefits.  They  are  now 
permitted  to  provide  any  benefit,  industrial,  commercial  or  agri- 
cultural, which  they  see  fit,  and  may  secure  a  legal  standing 
similar  to  that  granted  the  "free"  sickness  societies,  by  submitting 
their  by-laws  over  the  signatures  of  the  executive  committee  to  the 
local  authorities.  They  are  given  the  right  to  sue  and  be  sued  and 
to  acquire  property.  They  may  also  form  federations  and  organize 
special  benefit  and  insurance  funds.  Only  when  such  a  society 
has  violated  certain  laws  may  legal  proceedings  for  its  dissolution 
be  instituted.  Trade  associations  which  under  their  by-laws  fur- 
nish benefits,  enjoy  all  the  rights  of  sickness  insurance  societies 

210 


FRANCE 

under  the  law  of  1898.     The  following  figures  are  from  the  official 
report  of  trade  associations  of  France: 

TABLE    57. — NUMBER   AND    MEMBERSHIP    OF    TRADE     ASSOCIATIONS 
WHICH    PAY    BENEFITS,    1900,    1905 

January  i,  1900  January  i,  1905 

Number    Members  Number  Members 

Associations  established  by  employers      .      2,157        158,300  3,102       252,036 

Associations  composed  solely  of  employes       2,685       49'»^47  4*625        781,344 

Associations  of  mixed  membership.        .          170         28,519  144          25,863 

Agricultural  associations     ....     2,069        5I2>794  3>no       659,953 

Total 7,081     1,191,260       10,987     1,719,196 

The  activities  of  these  societies  include  (i)  1366  employment 
bureaus;  (2)  929  sickness  benefit  funds;  (3)  718  unemployment 
funds;  (4)  695  funds  to  support  workmen  traveling  in  search  of 
employment;  (5)  76  old  age  pension  funds;  (6)  26  funds  insuring 
against  industrial  accidents. 

Of  all  the  trade  groups,  the  best  protected  against  sickness 
are  seamen  and  miners;  for  them  obligatory  sickness  insurance 
schemes  have  been  established  by  law  to  which  both  employers 
and  employes  contribute.  Seamen  when  disabled  by  their  em- 
ployment are  compensated  by  the  ship-owners  for  a  period  up  to 
four  months,  at  the  end  of  which  time  obligatory  accident  and 
invalidity  insurance  applies.  Protection  offered  by  this  measure 
has  already  been  discussed  in  connection  with  our  treatment  of 
accident  insurance  in  France. 

In  accordance  with  the  law  of  June  29,  1894,  modified  by 
that  of  December  19  following,  mutual  sickness  societies  were 
organized  among  miners,  to  which  both  employers  and  employes 
must  contribute.  They  furnish  medical  attendance,  medicines 
and  sick  benefits  to  disabled  members  and  in  case  of  death 
relieve  their  families.  They  may  also  pay  cash  benefits  or  annui- 
ties to  widows  and  orphans  and  dependent  parents;  and  may 
provide  assistance  for  the  wives  and  children  of  members  called 
into  the  territorial  or  reserve  military  services;  also  special  pen- 
sions for  widows  and  orphans  of  such  deceased  members. 

These  societies  are  maintained:  (i)  By  deductions  from 
wages,  the  amount  of  which  is  fixed  by  the  administrative  coun- 

21 1 


INSURANCE   AGAINST  SICKNESS   AND   DEATH 

cil  of  each  society,  but  must  not  exceed  2  per  cent  of  the  wages 
nor  48  francs  ($9.60)  per  year;  (2)  by  payments  by  the  employer 
of  a  sum  equal  to  one-half  the  aggregate  amounts  paid  by  mem- 
bers; (3)  by  subsidies  from  the  government;  (4)  by  sums  donated 
or  bequeathed  by  charitably  disposed  persons;  and  (5)  by  fines 
incurred  by  infringement  of  rules  or  regulations.  They  differ 
from  ordinary  sickness  insurance  societies  only  in  that  member- 
ship and  the  contributions  both  of  employers  and  employes 
are  obligatory. 

The  following  figures  show  the  condition  of  the  miners' 
funds. 


TABLE    58.  —  STATISTICS    OF    MINERS*  SICKNESS    SOCIETIES, 

I90O  AND    1906 

A.    GENERAL  STATISTICS 

1900 

1906 

Number  of  societies    .                                  197 

199 

Number  of  members  .       .                    178,876 

204,570 

Number  of  members  to  each  soc  ety*           908 

1,027 

Number  of  sick           .       .                    141,090 

147-605 

Percentage  of  members                             79 

72.2 

Number  of  days  sick                          2,042,776 

2,292,889 

per  sick  person        .                                    14.48 

'5-5 

per  member     .                                           1  1  .42 

1  1 

Compensated  sick  days                       1,925,307 

2,161,525 

per  sick  person        .                                   13-64 

14.65 

per  member     .        .                                   10.76 

10.56 

Number  of  deaths  from  accidents               221 

1,302 

Number  of  deaths  from  sickness               ''558 

1,61  1 

Total  deaths    ....                    i  ,779 

2,913 

B.     INCOME 

(Francs) 

(Francs) 

Contributions  of  workers  .       .       .  3,770,686 

4,4'7.798 

Per  member  ....                      21.08 

21.60 

Trade  associations'  contribution 

1,929,430 

2,215,263 

Per  member  . 

10.79 

10.80 

State's  subvention 

929 

4,468 

Per  member 

0.005 

O.O2 

Fines   . 

373.270 

390,086 

Per  member 

2.09 

I.9O 

Interest 

72,129 

108,051 

Per  member 

0.405 

0.52 

From  the  reserve  fund 

156,395 

Per  member 

0.87 

Various  sources 

115,103 

187,463 

Per  member 

0.64 

0.92 

Total  . 

6,417,942 

7.323-129 

Per  member 

35.88 

3576 

*I2  societies  have  more  than  3000  members,  54)6 

ss  than  200. 

212 


FRANCE 

C.     EXPENDITURES 

(Francs)  (Francs) 

Medical  services     ....          670,709  898,697 

Medicines 1,758,586  2,162,289 

Hospital  service     ....            54.585  IO4.374 

Sick  benefits           ....       2,579,752  2,962,915 

Death  benefits       ....          106,769  125,644 

To  the  pension  fund     .        .        .            83,850  106,299 

Aid  to  sick 132,802  174.3" 

To  incurably  sick  members .        .            68,211  63,543 
To  dependents    of    deceased    mem- 
bers       150,260  268,093 

During  military  service  .  .  168,539  142,918 
Various  benefits  ....  94,881  113,174 
Cost  of  management  .  .  .  75,810  127,194 
Compensation  to  dismissed  members  22,738  23>$8i 
Compensation  to  judges  and  in- 
spectors    39.320  56,833 


Total 6,006,812  7,329,865 

In  considering  sickness  societies  as  a  whole,  it  is  encourag- 
ing to  note  that  they  are  more  and  more  realizing  their  function 
as  institutions  for  social  welfare.  Together  with  other  agen- 
cies, many  organizations,  and  especially  the  larger  of  them,  have 
recently  taken  an  active  part  in  the  work  of  social  hygiene. 
Some  support  sanatoria  for  tuberculous  members  and  print  and 
distribute  literature  on  personal  hygiene.  Despite  their  recent 
development  they  are  still  small  and  cannot  attempt  what  the 
great  fraternal  bodies  of  England  have  done.  Yet,  in  the  words 
of  M.  Georges  Paulet,  who  has  charge  of  the  governmental 
supervision  of  these  societies,  "  If  they  continue  to  increase  in 
the  coming  years  as  rapidly  as  they  have  in  the  past  decade;  if 
they  extend  their  activities  especially  into  those  parts  of  the 
country  where  they  are  now  inactive;  if,  in  spite  of  their  growth, 
they  retain  their  original  fraternal  character  but  at  the  same 
time  succeed  in  giving  to  their  operations  the  technical  security 
of  sound  insurance;  and  if  they  do  not,  with  the  widening  of  their 
sphere  of  beneficence,  permit  themselves  to  forget  that  the  field 
of  sickness  insurance  is  their  primary  duty,  they  will  surely  be 
among  the  most  valuable  instruments  for  social  well-being  through- 
out the  entire  country." 

Of  great  importance  is  the  part  which  certain  mutual 
insurance  societies  play  in  the  larger  cities  in  the  campaign 

213 


INSURANCE    AGAINST    SICKNESS    AND    DEATH 

against  infant  mortality.  This  is  the  especial  business  of  those 
known  as  "Les  Mutualites  Maternelles."  They  are  semi-charita- 
ble in  character,  the  contributions  of  honorary  members  be- 
ing of  the  greatest  importance.  No  admission  fee  is  exacted 
of  young  married  women,  whose  contributions  are  usually  lim- 
ited to  three  francs  (60  cents)  a  year.  In  case  of  sickness  or  con- 
finement the  society  grants  benefits,  generally  for  four  weeks, 
supplemented  by  additional  sums  if  needed,  and  by  the  service 
of  advisory  stations  and  milk  depots.  The  sick  benefit  is  granted, 
however,  only  on  condition  that  the  mother  is  not  engaged  in 
work  away  from  her  home  during  the  time  she  is  a  beneficiary. 

A  large  society  of  this  kind  has  been  developed  in  Paris 
under  the  management  of  a  former  employer,  Mr.  Poussineau. 
It  has  done  much  good  service,  and  has  been  an  incentive  to  the 
establishment  of  many  day  nurseries.  On  January  i,  1907,  there 
were  42  such  societies  in  France  with  18,681  women  members. 


SWITZERLAND 

As  in  France,  sickness  insurance  in  Switzerland  has  been 
almost  entirely  in  the  hands  of  voluntary  mutual  societies.  The 
first  attempt  on  the  part  of  the  government  to  regulate  these 
was  made  in  December,  1871,  when  a  law  was  passed  to  assure 
the  security  of  relief  and  pension,  and  savings  and  loan  socie- 
ties among  railroad  employes.  Since  1886,  railway  concessions 
have  been  made  or  renewed  only  on  the  condition  that  the  rail- 
road companies  create  for  their  employes,  pension  and  relief  funds 
approved  and  regulated  by  the  government.  A  law  of  June 
28,  1899,  further  regulated  societies  for  the  employes  of  rail- 
way and  steamship  companies  and  a  series  of  acts  provide  for 
the  care  of  disabled  employes  at  the  charge  of  the  employer.  In 
all  these  measures,  however,  no  adequate  provision  for  sickness 
insurance  exists. 

It  is  only  since  1890  that  anything  like  a  concerted  effort 
has  been  made  to  establish  uniform  and  comprehensive  legisla- 
tion in  this  field.  During  the  discussion  in  the  Federal  Council 
of  a  proposed  workmen's  compensation  act,  stress  was  laid  on 

214 


SWITZERLAND 

the  necessity  for  a  sickness  insurance  law  as  well.  In  June,  1890, 
the  Assembly  adopted  a  resolution  directing  the  government  to 
prepare  a  bill  providing  for  sickness  and  accident  insurance. 
Due  provision  was  to  be  made  for  utilizing  existing  sickness 
insurance  societies,  of  which  there  were  many.  Insurance  was 
to  be  obligatory  for  all  or  only  for  certain  classes  of  the  'pop- 
ulation, as  might  be  preferred.  This  proposal  was  submitted 
to  the  referendum  October  26,  1890,  and  was  approved  by  an 
overwhelming  majority. 

Six  years  later,  January  i,  1896,  the  Federal  Council  pre- 
sented two  bills  to  provide  for  sickness  and  accident  insurance. 
These  were  eventually  united  with  a  bill  presented  June  28, 
1898,  covering  military  insurance.  The  section  dealing  with 
sickness  proposed  compulsory  insurance  for  all  workingmen  and 
women  of  fourteen  years  of  age  or  over,  if  the  period  of  employ- 
ment was  not  less  than  a  week  and  yearly  earnings  did  not  exceed 
5000  francs  ($1000).  Arrangements  were  also  made  for  establish- 
ing cantonal  sickness  insurance  societies  which  would  admit 
day-laborers  and  others  not  provided  for  by  federal  sickness 
societies  and  who  did  not  elect  to  insure  in  a  private  society. 
In  addition,  employers  of  certain  classes  were  required  to  estab- 
lish sickness  societies  for  their  employes. 

Medical  care  and  medicines  were  to  be  furnished  up  to  one 
year,  and  a  sick  benefit,  beginning  with  the  third  day  of  inca- 
pacity. In  case  of  complete  incapacity,  this  benefit  was  to  be 
60  per  cent  of  the  daily  wages.  Voluntary  members  could  insure 
for  the  same  benefits,  or  by  paying  half  the  rate  could  secure  the 
medical  treatment  and  medicines  only.  In  case  of  death,  a 
funeral  benefit  of  from  20  to  40  francs  ($4.00  to  $8.00)  was  to 
be  paid. 

The  state  was  to  make  a  contribution  equal  to  one  rappe  per 
day  for  each  member  compulsorily  insured,  including  agricultural 
laborers  and  small  tradesmen,  and  for  every  voluntary  member 
of  Swiss  nationality.  In  localities  where  medical  aid  could  be 
given  only  at  a  high  cost,  the  state  was  to  pay  additional  sums 
toward  defraying  such  expenses.  The  remaining  cost  was  to  be 
covered  by  equal  contributions  from  employers  and  employes, 
their  total  payments  not  to  exceed  4  per  cent  of  the  wages.  On 

213 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

the  other  hand,  the  voluntarily  insured  day-laborers,  and  workers 
in  home  industries,  were  to  pay  the  entire  contribution  them- 
selves. 

This  bill,  including  provisions  for  accident  insurance  also, 
was  adopted  by  the  Assembly  on  October  5,  1899,  but,  on  being 
submitted  to  the  referendum,  was  rejected  by  a  vote  of  341,914 
to  148,035  and  the  work  of  twenty-five  years  was  apparently 
undone.  To  those  who  studied  the  subject  carefully,  however, 
it  was  clear  that  popular  opinion  was  not  opposed  to  compulsory 
insurance  legislation  as  such,  but  rather  to  special  features  in 
this  particular  measure.  It  was  opposed  especially  by  existing 
sickness  societies,  which  feared  that  they  would  be  menaced  by 
the  organization  of  the  public  sickness  insurance  societies  contem- 
plated in  the  bill.  They  also  objected  to  the  stringent  tests  of 
solvency  which  were  to  be  applied  to  private  sickness  insurance 
societies  as  a  condition  to  their  being  allowed  to  continue.  The 
obligatory  character  of  the  law  was  too  comprehensive  and  in- 
cluded too  many  classes  of  the  population,  and  was  particularly 
opposed  by  those  engaged  in  agriculture  and  forestry.  Belief  was 
expressed  that  the  confederation  might  not  be  able  to  meet  the 
financial  obligations  which  it  proposed  to  assume.  Finally,  the 
insufficiency  of  benefits,  as  compared  with  those  obtainable  under 
the  liability  law,  already  greatly  liberalized,  led  many  work- 
ingmen  to  vote  "No." 

On  December  10,  1906,  seven  years  after  the  defeat  of  this 
jaw  by  the  referendum,  another  bill  was  presented  by  the  Federal 
Council  to  the  National  Council,  which  referred  it  to  a  special 
commission.  The  report  of  this  commission  came  up  for  discus- 
sion in  the  lower  house  September  28,  1908,  and  was  finally 
adopted  with  amendments  October  7,  1908.  At  the  present 
time,  the  bill  is  before  the  National  Council  for  final  revision, 
and  from  latest  advices  is  not  likely  to  be  presented  to  the  people 
earlier  than  191 1  or  to  go  into  effect  before  1912  or  1913. 

Before  presenting  the  details  of  this  new  measure,  it  will 
be  well  to  notice  the  development  of  existing  organizations  and 
the  nature  of  their  activities.  The  long-continued  discussion 
in  the  legislature  has  centered  much  attention  on  the  sickness 
societies  and  at  the  present  time  we  have  a  very  complete  knowl- 

216 


SWITZERLAND 

edge  of  their  workings.  They  are  both  numerous  and  popular 
throughout  Switzerland.  In  a  population  of  3,391,645,  there 
were  in  1903,  2006  societies,  with  a  membership  of  505,947, 
the  number  having  increased  about  85  per  cent  and  the  mem- 
bership 141  per  cent  since  1880.  The  average  number  of  members 
per  society  in  1903  was  247,  and  15  per  cent  of  the  entire  pop- 
ulation was  insured  in  them.  Forty  per  cent  admit  women  as 
well  as  men.  The  latter  are,  however,  much  better  represented, 
constituting  79  per  cent  of  the  membership  as  compared  with 
21  per  cent  for  women.  Two  per  cent  are  boys.  It  is  encourag- 
ing to  observe  that,  under  the  influence  of  the  French  system, 
the  number  of  insured  children  is  constantly  increasing.  These 
societies,  as  in  most  other  countries,  grant  benefits  of  several 
kinds.  The  following  table  will  show  their  various  activities. 


TABLE    59. — NUMBER   AND    PER   CENT  OF    SICKNESS    INSURANCE 

SOCIETIES   AND  OF  THEIR  MEMBERSHIP,    BY    KIND 

OF   BENEFIT,    1903. 


Number 

Per 

Number 

Per 

Kind  of    Benefit 

of 

Cent  of 

of 

Cent  of 

Societies 

Total 

Members 

Total 

Sickness   .... 

1812 

90.3 

422,209 

85.4 

Funeral    .... 

'345 

67.0 

345-793 

69.9 

Old  age  and  invalidity  . 

150 

7-5 

62,914 

12.7 

Widows  and  orphans     . 

77 

3.8 

30,792 

6.2 

Unemployment 

4 

0.2 

1,604 

.03 

It  will  be  seen  that  nine-tenths  of  the  societies  insure 
against  sickness,  either  alone  or  in  combination  with  other  bene- 
fits, and  that  over  85  per  cent  of  the  members  (12  per  cent  of  the 
population)  are  insured  in  them.  Practically  70  per  cent  insure 
against  death  alone  or  against  both  death  and  sickness.  Very 
few  insure  against  old  age  or  invalidity  or  pay  widows'  and  or- 
phans' annuities.  The  average  membership  per  society  is  small 
and  there  has  been  but  little  government  supervision. 

Included  in  their  number  are  the  so-called  "Franken- 
kassen,"  assessment  life  insurance  societies  which,  upon  the 
death  of  a  member,  pay  a  benefit  to  his  family  by  assessing  each 

217 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 


surviving  member.  Some  of  these  also  insure  against  sickness. 
There  were  in  1903,  275  such  organizations  with  82,926  members. 
In  general,  the  mutual  societies  are  small.  More  than  70  per 
cent  have  less  than  200  and  over  90  per  cent  less  than  500  mem- 
bers each.  The  weakness  occasioned  by  their  small  membership 
almost  precludes  the  possibility  of  actuarial  solvency,  because  not 
enough  are  insured  to  afford  a  reliable  average  experience.  It 
is  the  purpose  of  the  new  legislation  to  combine  these  societies 
into  larger  institutions  and  thus  both  to  increase  their  effective- 
ness and  assure  an  average  experience. 

In  some  fields,  as  already  mentioned,  especially  in  the  rail- 
road and  steamship  industries,  the  government  compels  the 
establishment  of  such  associations  for  employes.  In  general,  the 
grouping  of  these  and  of  all  other  societies,  and  of  their  member- 
ship, according  to  the  method  of  admission,  is  shown  by  the 
following  table. 

TABLE    60. — NUMBER  AND   PER   CENT  OF  COMPULSORY  AND  VOLUN- 
TARY SICKNESS  INSURANCE  SOCIETIES  AND  OF 
THEIR   MEMBERSHIP,    1903 


Societies 

Per  Cent 

Membership 

Per  Cent 

Obligatory  for  all       .... 
Obligatory  for  special  workmen 

^ 
176 

1  8.0 
8.8 

81,511 
39.734 

,6.5 
8.0 

Total  obligatory     . 

537 

26.8 

121,245 

24.5 

Voluntary    

1469 

73-2 

373-393 

75-5 

Total  in  all  Societies 

2006 

IOO.O 

494,638 

100.0 

The  ratio  of  those  insured  in  voluntary  and  in  compulsory 
societies  is  thus  about  three  to  one.  Communal  and  cantonal 
societies  have  decreased  since  1880,  while  those  associated  with 
particular  industries  have  shown  a  corresponding  increase.  This 
is  clearly  shown  by  Table  61. 

Societies  have  increased  even  more  in  financial  resources 
than  in  membership.  Their  total  assets  amounted  in  1903  to 
89,451,991  francs  (117,890,398);  an  average  of  181  francs  (136.20) 
for  each  member.  Their  total  income  and  expenditures  in  that 

218 


SWITZERLAND 


year  were   16,149,814  francs  ($3,229,963),  and   11,122,432  francs 
($2,224,486),  respectively. 

TABLE    6l. — NUMBER     AND     PER     CENT    OF     SICKNESS     INSURANCE 
SOCIETIES,    BY  CLASS,    1880-1903 


1880 

1903 

INCREASE 

Class  of  Societies 

Soci- 

Per 

Soci- 

Per 

Soci- 

Per 

eties 

Cent 

eties 

Cent 

eties 

Cent 

Industrial        

<  97 

18.2 

540 

26.9 

343 

174.1 

Communal       

621 

57-2 

93° 

46.4 

309 

49-8 

County     

.65 

15.2 

343 

17.1 

,78 

107.9 

Cantonal  

7° 

6.5 

I  10 

5-5 

40 

57-' 

Railroad  or  steamship  company  . 

22 

2.0 

53 

2.6 

3' 

140.9 

All  Switzerland       .... 

IO 

0.9 

30 

'•5 

20 

2OO.O 

Total    

loSj 

IOO.O 

2006 

IOO.O 

921 

84.9 

The  following  table  will  show  the  sources  from  which  this 
income  was  derived  and  the  purposes  for  which  expenditures  were 
made. 

TABLE    62. — INCOME    AND    EXPENDITURES   OF    SICKNESS  INSURANCE 
SOCIETIES,    1903 


•i 

Amount 
(Francs) 

Per  Cent 

INCOME: 
Dues  and  initiation  fees        .       .       .       . 
Gifts  and  subventions    
Interest,  fines  and  other  income  

Total        

EXPENDITURES: 
Sickness  benefits     
Physicians,  medicines  and  hospital  service 
Death  benefits        
Pensions  to  widows  and  orphans  
Pensions  to  aged  and  to  permanently  disabled  members 
Management  expenses  .       .       .       .       . 
Other  expenditures        

Total 

9,240,100 
3.394.989 
3.5  M.725 

57-2 

2I.O 
21.8 

16,149,814 

IOO.O 

3,960,168 
i  ,640,222 
948,  i  oo 
1,276,213 
2,070,009 
459,581 
768,139 

35.6 

14.8 

8.5 

11.5 

1  8.6 
4.1 
6.9 

1  1,122,432 

IOO.O 

219 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

The  total  expenditure  per  member  amounted  to  22.40 
francs  ($4.48)  as  against  14.01  francs  ($2.80)  in  1880.  Manage- 
ment expenses  absorbed  5  per  cent  as  against  4.1  per  cent  of 
total  expenditure.  In  1903,  125,039  out  of  a  total  membership 
of  422,209  received  medical  aid  or  sickness  benefits  (about  30 
per  cent).  The  total  number  of  days  for  which  benefits  were 
paid,  were  2,718,043,  or  less  than  22  days  per  sick  member  and 
6.4  days  for  each  member  of  the  societies.  Forty-five  per  cent  of 
societies  granted  only  financial  aid  in  the  form  of  sick  benefits; 
47  per  cent  granted  both  medical  aid  and  sick  benefits;  4  per 
cent  granted  either  medical  aid  or  sick  benefits;  and  4  per  cent 
granted  medical  aid  only. 

These  distinctions  are  important.  There  is  considerable  dif- 
ference in  the  sickness  statistics  for  the  two  main  groups  referred 
to  above.  Though  the  number  of  members  in  the  two  groups  is 
about  the  same,  societies  which  give  financial  aid  only  had  23.8 
per  cent  of  their  members  receiving  sickness  benefits;  while 
those  that  granted  both  money  and  medical  treatment  had 
36.83  per  cent.  The  main  reason  for  this  is  that  societies  paying 
sick  benefits  only,  have  in  most  cases  a  "karens"  or  waiting 
period,  and  do  not  pay  for  the  first  days  or  even  sometimes  for 
the  first  week;  while  those  that  also  supply  medical  aid  usually 
pay  from  the  first  day  of  sickness.  This  is  further  illustrated  by 
the  fact  that  the  number  of  days  of  disablement  by  sickness  per 
member  was,  in  the  first  group,  considerably  higher— 29.08  days 
for  each  as  compared  with  only  19.01  days  in  the  second  group. 
This  is  due  to  the  large  number  of  very  short  illnesses  when  the 
benefits  include  every  day  of  sickness;  omission  of  these  brings 
down  the  average  duration. 

As  in  other  countries,  it  was  found  that  men  showed  a 
larger  percentage  of  sickness — 26.76  per  cent  as  compared  with 
24.26  per  cent  for  women.  The  number  of  days  for  each  man 
disabled  by  sickness,  however,  was  much  lower  than  for  women— 
23.55  as  compared  with  32.46.  This  last  fact  is  undoubtedly 
due  to  the  long  period  of  confinement  of  women  in  childbirth, 
during  which  sickness  benefits  are  paid.  In  making  compari- 
sons, it  should  be  observed  that  societies  differ  as  to  the 
liberality  of  treatment.  Some  enforce  a  period  of  four  weeks 

220 


SWITZERLAND 

or  more  for  new  members  before  they  are  "in  benefit."  Others, 
as  already  stated,  grant  them  after  the  member  has  been  sick 
only  one  or  more  days.  Most  limit  the  time  for  which  bene- 
fits are  paid.  About  10  per  cent  make  the  limit  12  weeks; 
nearly  27  per  cent  pay  only  for  13  weeks;  about  16  per  cent 
for  26  weeks;  6  per  cent  for  one  year;  and  only  about  3^  per 
cent  pay  benefits  during  the  entire  period  of  disablement,  no 
matter  how  long. 

The  sickness  societies  of  Switzerland  have  made  great 
progress  during  recent  years  in  number,  membership,  extension  of 
their  fields  of  operation  and  improvement  of  their  financial  con- 
ditions. Still  much  remains  to  be  done.  This  form  of  insurance 
is  imperfectly  developed  among  women  and  children;  there  is 
yet  great  need  of  it  in  outlying  districts;  and  technical  manage- 
ment calls  loudly  for  reform.  These  matters  the  law  now  before 
the  people  attempts  to  accomplish.  The  administration  has  long 
been  in  favor  of  a  compulsory  statute;  but,  as  there  has  always 
been  considerable  opposition  to  such  a  proposal,  the  Federal 
Assembly,  after  much  deliberation,  decided  that  it  was  not  wise 
to  submit  any  form  of  compulsory  sickness  insurance.  The  bill 
finally  passed  by  the  lower  house  provides  for  both  sickness 
and  accident  insurance  and  contains  100  articles,  the  first 
twenty  of  which  deal  with  sickness  insurance.  These  only  con- 
cern us  here. 

Sickness  insurance  remains  voluntary  and  is  to  be  carried 
on  through  the  agency  of  existing  societies.  The  cantons  and 
the  individual  communes,  however,  may  install  compulsory 
sickness  insurance  within  their  respective  jurisdictions.  All 
sickness  insurance  organizations  are  to  be  subsidized  by  the 
government  and  must  comply  with  certain  requirements  before 
receiving  recognition,  registration  and  the  right  to  the  subsidy. 
No  society  may  be  refused  recognition  because  of  its  political, 
trade,  or  religious  affiliations;  nor  shall  recognition  be  given  to 
any  whose  statutes  exclude  Swiss  citizens;  nor  to  any  admitting 
both  sexes  but  not  on  equal  terms.  To  obtain  benefits  under 
this  bill,  all  must  furnish  medical  treatment  and  medicine  to  their 
members  or  a  sickness  benefit  of  at  least  one  franc  (20  cents)  a 
day  in  case  of  total  disability.  They  are  permitted  to  require 

221 


INSURANCE   AGAINST   SICKNESS    AND    DEATH 

entrants  to  be  members  for  three  months  before  being  entitled  to 
benefits,  and  the  amount  of  total  cash  benefits  must  not  exceed 
the  average  wage  of  the  member.  Societies  desiring  recognition 
must  present  their  rules  and  by-laws  to  the  government  super- 
visors for  their  approval;  changes  in  the  rules  or  by-laws  must  be 
approved  by  the  government  supervisors  before  taking  effect; 
and  the  annual  report  must  be  presented  each  year  within  three 
months  after  the  close  of  the  fiscal  year  of  the  society. 

Medical  treatment  must  be  given  from  the  first  day  of 
illness,  and  the  sickness  benefit,  not  less  than  one  franc  per  day, 
from  the  third  day,  to  continue  during  disability  for  a  period 
of  not  less  than  six  months  when  necessary.  Benefits  must  be 
paid  a  disabled  member  even  if  he  loses  his  position  during 
his  illness.  The  member  is  entitled  to  a  free  choice  among 
the  physicians  and  druggists  registered  with  his  society  and 
agreeing  to  its  fixed  scale  of  charges.  The  society  may  fix  the 
charges  of  physician  and  druggist,  and  in  case  of  improper  con- 
duct on  the  part  of  either  may  withdraw  his  registration. 

Women  members  of  at  least  nine  months'  standing  are  to 
receive  benefits  during  confinement,  precisely  as  in  any  other 
illness;  and  if  on  recovery,  they  are  for  any  reason  prohibited 
from  working  by  law,  benefits  are  to  be  continued  during  the 
period  of  such  prohibition. 

Provision  is  made  for  transfer  of  membership  from  one  society 
to  another  in  order  to  permit  the  greatest  mobility  of  labor.  A 
member  who  has  been  such  for  at  least  one  year  and  not  in  arrears 
for  a  period  longer  than  three  months  is  entitled  to  the  same 
benefit  he  would  have  enjoyed  in  his  original  society,  if  his  trans- 
fer to  another  is  required  by  removal,  by  change  of  occupation 
or  by  the  insolvency  of  his  society.  This  holds  for  the  entire 
country,  so  that  a  workingman  may  go  from  one  trade  or  occupa- 
tion to  another,  or  from  one  community  to  another,  without  in 
any  way  altering  his  right  to  sickness  benefit. 

To  all  such  registered  societies  giving  medical  treatment 

and  medicines,  the  government  is  to  pay  one  rappe  *  for  men, 

and  one-fourth  rappe  for  women   and  children  under  fourteen 

for  each  day  of  membership.     The  government  contribution  is 

*  100  rappen  equals  one  franc. 

222 


SWITZERLAND 

one  and  one-half  rappen  for  societies  which  give  medicines,  med- 
ical treatment  and  pay  sickness  benefits  of  one  franc  (20  cents) 
a  day.  Where  geographical  conditions  make  the  cost  of  medical 
treatment  high  the  government  may  pay  to  the  amount  of  two 
rappen;  and  where  there  are  no  societies  and  it  is  not  possible 
to  form  one,  the  government  will  contribute  to  the  canton  or 
to  the  commune,  if  it  will  undertake  to  secure  inexpensive  med- 
ical care  for  the  sick,  the  total  contribution  not  to  exceed  three 
francs  (60  cents)  a  year  per  capita  of  population. 

Should  these  bills  become  law  as  is  now  confidently  ex- 
pected, it  is  estimated  that  fully  700,000  persons,  or  21  per  cent 
of  the  population,  will  be  entitled  to  benefits.  For  these  the  gov- 
ernment subsidies  will  be  distributed  in  the  following  manner: 
for  260,000  persons  one  rappe  per  diem,  for  170,000  one  and 
one-fourth  rappen  and  for  270,000  one  and  one-half  rappen. 
These  contributions  are  expected  to  aggregate  3,202,875  francs 
($640,575)  a  year.  This  total  does  not  include  extra  subven- 
tions to  particular  districts,  the  amount  of  which  is  still  more 
or  less  a  matter  of  conjecture.  Expenses  of  supervision  of 
registered  societies,  contributions  to  local  authorities  for  ex- 
penses of  supervising  public  sickness  societies,  and  eventually,  all 
unregistered  societies  as  well,  will  also  be  considerable.  The 
select  committee  of  the  national  council  estimates  the  total 
cost  to  the  government  of  this  plan  for  sickness  insurance  at 
4,500,000  francs  ($900,000)  a  year. 

It  is  most  encouraging  that,  even  on  a  voluntary  basis,  it 
has  been  possible  in  the  Swiss  Republic  to  develop  groups  of 
sickness  societies  which  have  reached  such  usefulness  and  effi- 
ciency that  they  can  become  the  chief  factor  in  a  general  scheme 
of  sickness  insurance  planned  by  the  government. 

It  should  be  observed  that  the  canton  of  Geneva,  under  a 
law  of  May  27,  1903,  introduced  an  excellent  subvention  and 
supervisory  system.  Under  this  law,  every  sickness  insurance 
society  which  complies  with  the  requisite  conditions,  receives 
annually  a  subvention  of  i\  francs  (50' cents)  for  each  member 
for  a  period  of  at  least  10  years.  In  the  years  1904  and  1907, 
the  number  of  subsidized  societies  in  Geneva  increased  from 
21  to  47  and  their  membership  from  4059  to  6176. 

223 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 
ITALY 

In  Italy,  as  in  England  and  France,  sickness  insurance  is 
carried  on  through  the  agency  of  mutual  societies  (Societa  di 
mutuo  soccorso).  They  are  the  outgrowth  of  the  older  working- 
men's  organizations,  and  not  only  furnish  sick  benefits  but  old 
age,  accident  and  funeral  benefits.  Originally,  they  received 
no  recognition  from  the  state,  not  even  possessing  the  right  to 
make  contracts  or  to  receive  legacies.  Under  such  conditions, 
progress  was  slow;  and  "honorary  members"  played  an  important 
part  in  their  activities.  As  the  working  classes  grew  in  power  and 
influence,  however,  they  took  over  more  and  more  the  active  man- 
agement of  their  organizations.  As  was  the  case  in  France  and 
England,  this  lack  of  supervision  resulted  in  evils  of  all  sorts.  In 
very  few  societies  was  there  any  actuarial  basis  for  the  payment  of 
benefits.  Promises  were  made  which  could  not  be  fulfilled,  and  pre- 
miums were  nearly  always  inadequate.  Some  societies,  recognizing 
this,  did  not  attempt  to  guarantee  definite  benefits  but  merely  prom- 
ised to  pay  according  to  the  contributions  actually  realized.  The 
need  of  legislation  was  therefore  apparent,  the  societies  themselves 
asking  for  it.  A  government  investigation  in  1882  showed  clearly 
the  prevalence  of  the  above  evils.  After  much  discussion,  a  regis- 
tration law  was  passed  April,  1886.  Registration,  as  in  France 
and  England,  is  entirely  voluntary,  but  societies  which  register 
receive  corporate  powers  and  in  some  cases  subsidies  from  the 
state,  the  latter  usually  taking  the  form  of  additions  to  sickness 
and  funeral  benefits.  Societies  are  required  annually  to  file  a 
certified  statement  of  assets  and  liabilities,  and  to  register  their 
by-laws. 

On  December  31,  1885,  there  were  about  5,000  societies 
with  800,000  members;  in  1905,  the  number  had  increased  to 
6,535  and  membership  to  1,000,000.  In  nearly  all,  members  pay 
a  single  equal  monthly  premium  for  the  benefits,  without  regard 
to  age.  Only  a  few  have  graded  premiums;  and  the  guaranty 
of  sickness  and  other  benefits  is  based  not  on  what  premiums  will 
purchase,  but  on  the  ability  of  the  membership  to  meet  further 
assessments.  No  provision  is  made  for  actuarial  solvency  or 
adequate  reserves. 

224 


ITALY 


Sick  benefits  are  very  meagre.  Most  of  the  societies  also  have 
a  waiting  period  before  benefits  become  payable,  varying  from 
three  to  ten  days;  and  in  most  there  is  a  "karens"  period  of  from 
one  to  four  years  after  admission,  during  which  time  new  mem- 
bers are  not  entitled  to  benefits. 

The  following  table  shows  the  development  of  these  soci- 
eties from  1 862  to  1904. 

TABLE     63. — NUMBER     OF     MUTUAL     AID     SOCIETIES,     MEMBERSHIP 
AND   FUNDS,    1862-1904 


Year 

Total  Number 
of  Societies 

Societies 
Reporting 

Number  of 
Members 

Societies 
Reporting 

/i  mount  of 
Funds 
(Lire) 

1862 

•873 
1878 
1885 
1894 
1904 

443 

1.447 
2,091 

4,896 
6,722 

6,535 

443 
1,146 
1,981 

4>77>2 
6,587 

6,347 

111,608 
218,822 
33  ',548 
781,491 
994,183 
926,026 

37« 
1,095 

',949 
3,520 

6.033 

2,7  15-749 
9,351,580 
21,141,662 
32,200,840 

72,395,544 

Though  the  aggregate  funds  are  now  at  least  $15,000,000, 
few  of  the  societies,  for  the  most  part  very  small  organizations, 
are  solvent.  On  December  31,  1904,  less  than  20  per  cent  of  them 
had  over  200  members  each.  Over  50  per  cent  had  less  than  100 
members  each.  Over  75  per  cent  had  less  than  10,000  lire 
($2,000)  apiece  in  the  treasury  and  nearly  59  per  cent  less  than 
5000  lire  (|i,ooo).  The  total  income  and  expenditures  during 
1904,  and  the  funds  on  hand  at  the  end  of  the  year,  of  all  the 
societies  combined,  were  14,532,425  lire  ($2,906,485);  11,790,028 
lire  ($2,358,006);  and  72,395,544  lire  ($14,479,109),  respectively. 
These  figures  apply  only  to  societies  concerning  whose  financial 
affairs  it  was  possible  to  obtain  information.  Had  the  remaining 
societies  shown  the  same  average  conditions,  the  figures  would 
have  been  15, 307,769  lire  ($3,061,554),  12,435,091  lire  ($2,487,018), 
and  78,536,665  lire  ($15,707,333).  These  figures  distributed  over 
the  1,000,000  members  in  all  the  societies  would  make  the 
annual  payment  per  member  in  both  registered  and  unregistered 
societies  about  16  lire  ($3.20)  as  against  14.02  lire  in  1885,  and 
the  annual  expenditure  per  member  about  13  lire  ($2.60)  as 
'5F  225 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

against  9.97  lire   ($1.99)   in   1885.     The  particular  objects   for 
which  disbursements  were  made  are  shown  in  the  following  table. 

TABLE    64. — PERCENTAGES  OF  DISBURSEMENTS  IN   SICKNESS   INSUR- 
ANCE  SOCIETIES,    1904 

In  Benefits  for           Per  Cent            For  Other  Purposes  Per  Cent 

Sickness         .       .       .       22.46        Tuberculosis  sanatoria     .  28.78 

Chronic  invalidity  and                       Other  social  activities       .  7.05 

incapacity  .       .       .         4.40        Sundry  expenditures       .  2.68 

Old  age  ....       10.87        Management  expenses     .  13.14 

Funeral  expense    .       .           .75         Extraordinary  expenses  5.91 
Support  of  relatives     .         2.62 

Other  benefits       .       .         1.34               Total  ....  57.56 

Total       .       .        .       42.44 

Out  of  463,088  members  in  2906  societies,  in  1885,  22.55 
per  cent  received  sickness  benefits.  The  number  of  days  of  sick- 
ness, for  which  benefits  were  paid,  was  20.14  f°r  eacn  slc^-  rnem- 
ber,  and  4.54  days  for  each  member.  In  1903,  on  the  other 
hand,  the  number  of  days  of  sickness  for  each  sick  member  rose 
to  22,  and  the  average  for  each  member  was  5.52  days,  the  number 
of  members  receiving  sickness  benefits  having  risen  to  25  per 
cent  of  the  total.  The  actual  sickness  periods,  it  should  be  stated, 
are  much  longer  than  indicated  in  the  above  figures,  since  the 
number  of  days'  illness  during  the  "waiting  period"  and  those  in 
which  illness  continued  but  benefits  had  ceased  are  not  included. 

From  these  figures,  it  is  clear  that  the  sickness  societies 
of  Italy  are  in  every  way  behind  those  of  France  and  England. 
Out  of  a  total  population  of  33,000,000  in  1905,  of  whom  10,000,- 
ooo  were  wage-earners,  only  1,000,000,  or  10  per  cent,  were  definitely 
assured  a  benefit  in  case  of  sickness.  These  members  are,  more- 
over, in  the  largest  number  of  cases,  small  operators  and  factory 
proprietors.  The  great  mass  of  the  working  population,  particu- 
larly the  lowest  stratum,  is  not  yet  included.  The  reasons  for 
this  condition  are  not  difficult  to  understand.  As  is  well  known, 
Italian  workmen  receive  miserably  poor  wages.  Legislation  was 
undertaken  very  late  and  has  been  groping  rather  than  guiding 
in  character.  Nor  have  the  societies  themselves  had  such  experi- 
ence in  self-government  as  characterizes  those  of  other  countries. 
This,  together  with  the  low  educational  status  of  the  people  makes 
any  highly  developed  plan  of  voluntary  organization  impossible. 

226 


GERMANY 

It  has,  therefore,  become  clear  to  those  most  actively  and 
influentially  associated  in  the  movement  for  workingmen's  insur- 
ance in  Italy,  that  sickness  insurance  should  become  obligatory, 
on  a  basis  of  contributions  by  both  employers  and  workingmen. 
It  is  recognized  that  the  welfare  of  the  state  requires  that  work- 
ingmen be  insured,  and  that  after  due  provision  has  been  made 
for  all  risk  that  can  be  ascribed  to  occupation,  there  still  remains 
a  large  amount  of  peril  to  the  individual  and  his  dependents 
against  which  there  must  be  protection. 


GERMANY 

The  earliest  provision  against  sickness  for  German  working- 
men  was,  as  in  other  countries,  in  the  nature  of  poor  relief.  The 
great  body  of  self-respecting  workingmen  did  not,  therefore,  avail 
themselves  of  this  provision.  Only  the  bare  necessaries  of  life  were 
doled  out  and  relief  could  be  obtained  only  upon  condition  that 
there  was  nobody  able  and  in  duty  bound  to  care  for  the  dis- 
tressed. No  right  to  this  support  was  acknowledged  and  to 
accept  it  involved  loss  of  civil  rights. 

To  understand  the  steps  which  more  directly  led  to  the 
passage  of  the  obligatory  sickness  insurance  law,  one  must  turn 
to  the  workingmen's  organizations  which  had  flourished  in  Ger- 
many for  many  years.  The  operations  of  the  guilds  are  particu- 
larly significant.  They  served  their  members  not  only  as  trade 
unions,  but  for  relief  in  sickness,  part  of  the  contributions  being 
turned  over  to  hospitals  to  assure  care  at  such  a  time.  In  case  of 
death,  a  funeral  was  provided  by  the  guild  and  certain  sums 
were  paid  to  dependents.  These  provisions,  however,  did  not 
apply  either  to  journeymen  or  apprentices,  being  restricted  to 
master  workmen  only.  Journeymen  were  later  permitted  to  form 
associations  of  their  own  for  purposes  of  relief  in  event  of  sick- 
ness or  accident.  Apprentices  were  cared  for  by  the  master 
workmen  in  case  a  provision  to  that  effect  was  in  the  deed  of  in- 
denture; otherwise  they  were  supported  by  their  own  relatives 
or  by  private  or  public  charity. 

These  guilds  and  associations  of  journeymen  included  nearly 

227 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

every  industry.  They  were  the  recognized  agencies  by  means  of 
which  the  state  could  legislate  for  the  benefit  of  the  working 
classes.  Even  when  the  laws  of  Prussia  were  codified,  they  were 
permitted  to  retain  many  of  their  early  rights  and  privileges. 
With  the  enactment  of  more  modern  industrial  statutes,  however, 
they  were  not  only  largely  placed  under  government  control,  but 
their  further  development  was  fostered  by  the  industrial  statutes 
of  Prussia  of  January,  1845,  February,  1849,  and  April,  1854. 

The  law  of  1845  not  only  permitted  workingmen  to  continue 
their  mutual  benefit  societies  but  encouraged  the  establishment  of 
additional  sickness,  burial  and  relief  societies,  as  well  as  mutual 
savings  banks.  Thus  arose  the  guild  "sick-clubs"  or  "Innungskas- 
sen,"  which,  it  is  interesting  to  observe,  were  among  the  first  in- 
stitutions to  introduce  the  element  of  insurance.  All  mechanics 
not  belonging  to  a  guild  could  by  local  statute  be  formed  into  an 
"inferior  guild."  Higher  classes  of  skilled  workmen  were  not 
under  obligation  to  belong  to  such  societies;  but  the  lower  classes 
of  the  unskilled  were  often  required  by  law  to  give  satisfactory 
reasons  to  the  authorities  for  failure  to  join. 

The  law  of  1849  further  authorized  local  authorities  to 
arrange  with  employers  to  form  establishment  or  affiliated  indus- 
try funds.  Employers  were  also  encouraged  to  make  contribu- 
tions to  such  funds  equal  to  at  least  half  the  amount  contributed 
by  employes  and  were  required  to  collect  the  payments  of  their 
workmen,  deducting  them  from  their  wages. 

The  principle  of  obligatory  insurance  was  first  recognized 
in  the  law  of  1854.  Power  was  then  given  local  authorities,  not 
only  to  require  the  formation  of  insurance  societies,  but  to  require 
certain  classes  of  employers  to  contribute  one-half  the  cost. 
In  such  cases,  the  latter  were  entitled  to  a  voice  in  the  manage- 
ment. For  the  first  time,  the  statute  extended  insurance  to  fac- 
tory employes  who  had  heretofore  enjoyed  none  of  the  rights  and 
duties  of  master  workmen  or  journeymen  and  had  not  been  in- 
cluded in  legislation  concerning  the  guilds. 

The  best  developed  guilds  or  trade  unions  were  those  of  the 
mining  industry  (the  so-called  Knappschaftskassen),  which  for  our 
purposes  are  the  most  important,  since  in  them  compulsory  insur- 
ance was  earliest  developed.  The  laws  regulating  these,  moreover, 

228 


GERMANY 

served  the  government  as  a  basis  and  model  for  the  more  general 
measures  which  came  later.  These  organizations  of  miners  were  of 
ancient  origin.  The  oldest  mining  laws  mentioned  doctors'  fees 
for  sick  workmen  and  fixed  the  amount  of  pensions  to  be  paid 
to  the  disabled  or  to  widows  and  orphans.  Benefits  were  paid 
through  the  guild.  Later  the  law  of  Prussia  compelled  mine 
owners  to  care  for  disabled  miners  employed  by  them,  whether 
the  disability  was  due  to  sickness  or  accident.  The  injured  were 
also  entitled  to  full  wages  for  periods  of  four  and,  in  some  cases, 
eight  weeks  if  disabled  that  long.  Widows  were  entitled  to  pen- 
sions. 

The  miners'  aid  societies,  like  the  guilds,  were  put  on  a  firmer 
basis  by  the  law  of  April,  1854.  This  statute  also  made  it  obliga- 
tory for  all  employes  in  mines,  mills,  salt-works,  etc.,  to  form 
such  guilds.  Clerks,  inspectors  and  civil  engineers  could  also  join, 
at  their  option.  Members  were  entitled,  in  case  of  disability 
whether  resulting  from  sickness  or  accident,  to  the  cost  of  medical 
attendance  and  medicines,  to  sick  benefits  during  the  first  weeks 
as  well  as  a  smaller  income  in  case  of  permanent  disability,  and, 
in  event  of  death,  funeral  expenses  were  defrayed.  Provision 
was  also  made  for  the  support  of  the  widow,  and  for  the  education 
of  children  of  a  miner  who  died.  Mine  owners,  as  well  as  miners, 
were  obliged  to  make  contributions  to  the  common  fund,  that 
of  workmen  being  limited  to  a  certain  small  percentage  of  their 
wages.  Mine  owners  were  required  to  contribute  at  least  half 
as  much  as  their  workmen;  and  were  responsible  for  collecting 
the  payments  of  their  employes  and  for  seeing  that  their  member- 
ship was  kept  up. 

In  the  meanwhile,  a  new  type  of  workingman's  club 
began  to  appear, — the  friendly  society  imported  from  England. 
Its  democratic  features  caused  the  working  classes  to  establish 
similar  voluntary  associations,  rather  than  submit  to  government 
control  under  the  laws  of  1849  and  1854.  Accordingly,  these 
societies  soon  became  the  chief  reliance  of  the  laboring 
classes,  more  and  more  displacing  the  antiquated  guilds.  A  vol- 
untary association  of  workingmen  with  a  membership  of  10,000 
existed  in  Berlin  as  early  as  1848,  but  it  fell  under  the  suspicion 
of  the  authorities  and  was  proscribed  and  suppressed.  Later, 

229 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

under  the  leadership  of  Lassalle,  the  memorable  "German  Work- 
ingmen's  Society"  was  founded.  A  well-developed  system  of  in- 
surance formed  part  of  its  program,  as  it  did  of  all  future  organ- 
izations of  this  character. 

An  even  stronger  impetus  was  given  to  the  development  of 
such  societies  by  the  labor  statute  of  June  21,  1869,  which  ex- 
empted workingmen  from  obligations  imposed  by  the  law  of  1854, 
provided  they  had  already  become  members  of  a  benefit  association 
of  their  own.  The  question  soon  arose  whether  this  privilege 
was  extended  to  voluntary  or  applied  only  to  registered  associa- 
tions chartered  by  the  government.  This  led  to  contradictory 
judicial  decisions,  but  the  matter  was  settled  by  the  passage  of  the 
important  law  of  April,  1876,  which  finally  put  voluntary  benefit 
associations  upon  a  firm  legal  footing.  Each  such  organization, 
whether  voluntary  or  obligatory,  thereafter  enjoyed  a  legal  status 
and  the  privileges  of  registered  associations.  The  older  guild 
"sick-clubs"  and  the  newer  societies  were  placed  on  the  same 
footing.  The  measure  restricted  the  operations  of  the  societies 
to  paying  sick  benefits  and  funeral  expenses,  determined  the 
duration  of  the  former  and  fixed  rates  of  contribution.  It  per- 
mitted both  local  and  national  societies  to  be  formed;  authorized 
the  merger  of  several  societies  into  one,  and  interposed  no  objec- 
tion to  a  trade  union  supporting  such  associations.  At  the  same 
time,  certain  precautions  were  taken  to  secure  funds  from  mis- 
appropriation. 

In  other  kingdoms,  now  embraced  in  Germany,  similar 
compulsory  insurance  measures  were  passed.  Brunswick,  Saxony 
and  Hanover  went  even  further  than  Prussia  and  required  that 
all  workingmen  should  belong  to  some  mutual  aid  association.  In 
Bavaria,  Baden  and  Wiirtemberg,  a  plan  was  evolved  which  en- 
abled local  authorities  to  administer  directly  the  affairs  of  insur- 
ance societies  for  the  indigent.  By  the  laws  of  1 869,  1 870  and  1 877, 
local  authorities  were  empowered  to  collect  from  all  servants, 
artisans,  factory  hands,  in  fact  from  all  workingmen  who  did  not 
own  their  own  homes  or  live  with  parents,  a  regular  weekly  assess- 
ment of  three  kreuzers,  later  1 5  pfennige  (3^  cents),  the  employer 
being  held  responsible  for  the  payment  of  these  amounts.  Contri- 
butions were  turned  over  to  the  poor-funds  or  into  a  special  hospital 

230 


GERMANY 

fund,  workingmen  thus  acquiring  a  legal  and  enforceable  claim 
for  aid,  up  to  13  weeks,  in  case  of  disability.  In  this  way,  com- 
munal sick-clubs  or  "Gemeindekrankenkassen"  were  developed. 

In  consequence  of  these  varied  enactments  and  organiza- 
tions, there  prevailed  toward  the  end  of  the  seventies,  a  confused 
situation  in  the  field  of  workingmen's  insurance.  Some  organiza- 
tions were  compulsory,  others  voluntary;  some  national  in  their 
scope,  others  local;  some  connected  with  certain  trades,  others  of 
mixed  membership.  Much  the  same  diversity  existed  in  the  relief 
afforded;  some  gave  sick  benefits  only,  others  death  benefits 
only;  still  others,  both.  Some  were  distinctly  annuity  associa- 
tions providing  for  invalidity  and  old  age;  others  gave  aid  to 
widows  and  orphans,  while  several  combined  all  these  branches 
of  insurance.  All  differed  in  the  amount  of  benefits,  duration  of 
payments,  and  contributions  required.  Everywhere  was  uncer- 
tainty as  to  the  obligation  resting  upon  employers. 

These  attempts  to  institute  obligatory  insurance  locally, 
or  in  certain  trades,  throughout  the  empire,  produced  meagre 
results,  and  it  was  clear  that  existing  arrangements  were  entirely 
insufficient  to  meet  the  need  of  workingmen.  Sickness  and  funeral 
benefit  societies  were  widely  distributed,  but  they  depended 
entirely  on  the  initiative  either  of  workingmen  or  the  communal 
authorities.  These  often  acted  without  knowledge  or  the  proper 
spirit;  and  in  spite  of  the  encouragement  of  the  laws  of  1849  and 
1876,  only  a  small  percentage  of  the  working  population,  the  better 
paid  and  most  intelligent,  was  reached.  Statistics  of  1880  show 
that  in  Prussia  839,602  members  belonged  to  registered  friendly 
societies,  220,000  to  miners'  societies,  and  about  200,000  to  non- 
registered  friendly  societies.  Only  half  of  those  for  whom  the 
voluntary  insurance  law  was  intended,  availed  themselves  of  its 
protection. 

The  necessity  for  a  thoroughgoing  change  in  the  situation 
of  workingmen's  insurance  was  apparent.  It  was  the  subject  of 
daily  discussions  in  the  press  and  periodicals,  as  well  as  in  the 
universities.  Some  wished  to  extend  the  principle  of  the  mining 
laws  to  all  workingmen.  Others  suggested  an  obligatory  sick- 
ness insurance  law,  with  the  voluntary  aid  societies  as  a  foun- 
dation. Still  others,  with  a  special  reference  to  accidents,  insisted 

231 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

on  the  development  of  a  national  obligatory  insurance  law.  After 
one  unsuccessful  effort  in  this  direction,  the  government,  on 
May  8,  1882,  presented  two  separate  measures,  one  relating 
to  accident,  the  other  to  sickness  insurance.  The  two  bills 
were  inter-related  and  supplemented  each  other;  but  for  political 
reasons,  they  were  taken  up  separately.  The  sickness  insur- 
ance law  was  the  first  to  be  passed  (June  15,  1883)  and 
went  into  effect  December  i,  1884.  It  was  obligatory  in  char- 
acter and  applied  to  all  workingmen  and  managing  employes 
of  mines,  quarries,  factories,  and  other  industrial  concerns, 
whose  annual  wages  were  not  in  excess  of  2000  marks  ($500). 
Local  authorities  were  empowered  to  establish  obligatory  insur- 
ance for  groups  of  trades  composed  of  small  masters  and  mechanics 
working  at  home,  as  well  as  for  agricultural  laborers.  As  the  first 
condition  of  compulsory  insurance  is  dependence  upon  an  em- 
ployer, persons  carrying  on  business  of  their  own  were  generally 
exempted;  but  such,  as  well  as  servants  and  other  exempt  work- 
ingmen, could  participate  voluntarily  in  the  benefits  of  the  insur- 
ance societies.  An  additional  measure  of  April  10,  1892,  which 
became  effective  in  1893,  extended  the  compulsion  to  all  persons 
employed  in  stores  and  offices,  provided  their  yearly  earnings 
were  not  over  2000  marks. 

In  the  operation  of  this  law,  the  government,  as  far  as  pos- 
sible, utilized  existing  agencies.  No  attempt  was  made  to  cen- 
tralize the  control,  it  being  clearly  recognized  that  in  order  to 
obtain  the  best  results  there  must  be  no  harsh  breaking  away 
from  the  ties  already  existing  between  workingmen  and  the  asso- 
ciations which  had  served  them  so  long.  The  aim  of  the  law  was 
mutual  insurance,  with  self-administration;  and  the  various 
associations,  composed  of  members  of  the  same  trade  or  locality, 
naturally  lent  themselves  to  this  purpose.  The  intimate  relation 
between  members  of  small  associations,  it  was  thought,  would 
make  simulation  more  difficult  and  inspection  easier  and  more 
effectual.  Consequently  sickness  insurance  was  entrusted  to 
a  large  number  of  separate  associations.  Guild  sick-clubs, 
miners'  societies,  communal  societies,  were  all  authorized  as 
institutions  in  which  it  might  be  carried.  Additional  organiza- 
tions, however,  were  needed  to  admit  those  not  already  provided 

232 


GERMANY 

for.  Eight  distinct  classes  of  societies,  each  absolutely  indepen- 
dent of  the  others,  were  thus  recognized,  the  sole  common  require- 
ment being  that  they  should  make  annual  reports  and  conform 
to  provisions  of  the  law  with  reference  to  minimum  benefits  and 
methods  of  investing  funds.  The  eight  classes  follow: 

1.  Communal   societies   (Gemeindekrankenkassen).    These, 
strictly   speaking,   are    not   "societies"   but    local    institutions, 
founded  by  the  authorities  and  required  to  accept  all,  of  what- 
ever occupation,  who  are  obliged  to  insure  but  do  not  belong  to 
any  other  sickness  insurance  society. 

2.  Local  societies  (Ortskrankenkassen),  established  by  town- 
ships, for  the  various  trades  respectively,  two  or  more  townships 
often  uniting  to  form  one  society.     At  present  they  are  the  most 
popular  of  all  because  of  their  elastic  management. 

3.  Factory   societies    (Betriebskrankenkassen),   created   by 
proprietors  of  factories  where  more  than   50  workers  are  em- 
ployed, particularly  in  trades  where  the  risk  of  sickness  or  acci- 
dent is   high.     Management  is  under  the  joint  control   of   the 
workingmen  and  the  employers. 

4.  Builders'  societies  (Baukrankenkassen).     These  must  be 
established  by  contractors  in  building  operations  and  in  public 
works,  because  of  the  great  risks  incurred  in  these  trades.     In  the 
nature  of  the  case,  they  are  temporary. 

5.  Guilds,  sick-clubs,  or  trade   societies    (Innungskranken- 
kassen),  authorized   by  the  National   Trades   Regulation    Law. 
Unlike  the  others,  they  do  not  possess  legal  personality,  but  are 
considered  a  mere  function  of  the  guilds  or  trade  unions. 

6.  Miners  societies  (Knappschaftskassen),  formed  in  accord- 
ance with  the  mining  laws  of  the  several  kingdoms.     Membership 
is  limited  to  miners;   and  not  only  sick  benefits,  but  old  age  and 
invalidity  pensions  and  widows'  and  orphans'  benefits  are  supplied. 

7.  Voluntary  Mutual  Aid  societies  (Hilfskassen).     These  are 
the  friendly  societies,  supported  and  controlled  solely  by  mem- 
bers, without  any  participation  by  employers.     Membership  is 
usually  open  to  all,  without  regard  to  trade.     They  are  not  under 
the  control  of  the  authorities,  other  than  that  they  must  grant 
the  minimum  benefits  required  by  law. 

8.  Independent  State  Societies  (Landesrechtlichehilfskassen), 

233 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

are  voluntary  associations,  organized  under  the  auspices  of  cer- 
tain kingdoms  or  other  districts  of  the  empire. 

Whatever  the  form,  the  law  secures  insured  workingmen 
a  certain  minimum  benefit  in  case  of  disability  whether  from 
accident  or  sickness  for  a  period  of  at  least  26  weeks  (prior  to 
January  i,  1904,  13  weeks),  which  includes:  (i)  Free  medical 
attendance  and  medicines  from  the  commencement  of  the  illness, 
spectacles,  trusses,  bandages,  crutches,  and  the  like;  (2)  while 
disabled,  a  sick  benefit  after  the  third  day,  of  one-half  the  daily 
wages,  and  in  special  cases,  free  admittance  to  a  hospital,  with 
half  the  sick  benefit  paid  to  the  family  for  their  support;  (3) 
twenty  times  the  average  daily  wage  as  a  funeral  benefit;  (4)  a 
benefit  for  women  members  for  six  weeks  after  confinement. 
These  are  the  minimum  benefits  under  the  law.  Societies  may 
give  additional  benefits  up  to  the  full  average  daily  earn- 
ings. They  may  also  pay  for  52  instead  of  26  weeks;  and  to 
women  after  confinement  for  12  instead  of  6  weeks.  The  daily 
benefit  may  be  raised  from  one-half  to  three-fourths  the  wage 
and  the  funeral  benefit  from  20  to  40  times  the  average  daily 
wage.  Sick  allowance  may  also  be  paid  for  the  first  three  days 
of  disability,  for  Sundays  and  holidays,  and  benefits  be  extended 
to  other  members  of  the  family  and  to  convalescents. 

Contributions  to  voluntary  societies  are  not  fixed,  but 
those  to  the  communal  societies  are  limited  by  law  to  from  i  to 
2  per  cent  of  the  daily  wages  of  common  laborers.  In  others, 
contributions  must  not  exceed  from  3  to  4  per  cent  of  the  average 
daily  wages.  Of  this  sum,  workingmen  pay  two-thirds  and 
employers  one-third.  In  practice,  employers  pay  all  and  deduct 
the  proper  amount  from  wages.  This  method  avoids  all  necessity 
for  collectors,  contributions  both  of  employers  and  employes 
being  turned  over  to  the  societies  at  convenient  intervals. 

The  employer  must  enforce  upon  his  men  the  duty  of 
insuring.  No  direct  compulsion  is  placed  upon  the  working- 
man,  who  may  insure  or  not,  as  he  pleases.  Whoever  employs  an 
uninsured  workingman,  however,  renders  himself  liable  both  to  a 
fine  and  to  the  payment  of  all  costs  in  case  of  sickness  or  accident. 
In  such  cases,  the  communal  society  of  the  district  assumes  the 

234 


GERMANY 

care  of  the  disabled  employe,  pays  for  medical  service,  medicine, 
nursing,  and  gives  the  usual  cash  benefits  during  disablement,  for 
all  of  which  the  employer  becomes  liable  to  the  society. 

The  law  of  1883  was  a  gigantic  legislative  experiment.  It 
has  been  urged  by  some  that  it  was  launched  without  sufficient 
scientific  investigation.  No  exact  calculation  of  the  scope  of 
its  operation  was  at  that  time  possible;  and,  as  might  be  ex- 
pected, difficulties  of  administration  soon  arose  and  many  oppor- 
tunities were  opened  for  improvement.  Several  amendments 
have  therefore  been  enacted  from  time  to  time.  The  first,  that  of 
April  10,  1892,  went  into  effect  January  i,  1893.  This  extended 
the  provisions  to  employes  in  stores  and  offices  and  the  payment 
of  benefits  during  disability  to  a  period  of  at  least  13  weeks. 
It  also  improved  the  relation  between  mutual  societies,  com- 
munal and  local  sick-clubs,  and  established  a  better  understand- 
ing between  the  various  societies  and  the  accident  insurance 
associations  of  employers  in  regard  to  the  old  age  and  invalidity 
funds.  Another  amendment  made  on  June  30,  1900,  author- 
ized the  Bundesrath  to  extend  compulsory  insurance  to  workers  in 
home  industries.  The  most  important  amendment,  however,  is  that 
of  May  25,  1903  which  from  January  i,  1904,  increased  the  period 
of  sick  benefit  to  26  weeks  and  of  that  to  women  after  confinement 
from  four  to  six  weeks  at  the  option  of  the  societies.  Clerks  and 
apprentices  whose  wages  do  not  exceed  2000  marks,  were  also 
brought  under  the  obligation  to  insure,  and  provision  was  made  for 
the  extension  of  free  medical  aid  to  families  of  the  insured. 

Despite  these  amendments,  there  is  still  much  to  be  desired, 
even  in  this  remarkably  liberal  measure.  Agricultural  workmen 
and  servants  are  yet  unprotected,  and  other  matters  require 
attention.  To  correct  these  defects,  a  new  amendment,  covering 
the  entire  field  of  workingmen's  insurance,  is  now  before  the  gov- 
ernment.* 

Whatever  be  the  limitations  of  the  system  at  the  present 
time,  even  its  severest  critics  are  agreed  that  it  is  effectual.  After 
continuous  operation  for  25  years,  it  now  protects  more  than 
1 3,000,000  working  men  and  women.  As  many  of  the  men  are  heads 
of  families  whose  wives  and  children  are,  in  most  cases,  also  entitled 

*See  Chapter  XVIII,  The  Reform  Project  in  Germany,  page  406. 
235 


INSURANCE   AGAINST  SICKNESS    AND   DEATH 


to  treatment  and  benefits,  it  is  clear  that  more  than  half  of  the 
population  of  Germany  is  directly  and  beneficially  affected. 

The  actual  operations  of  the  various  agencies  for  sickness 
insurance  are  thus  worth  being  shown  in  considerable  detail. 
Table  65  shows  the  number  of  different  types  of  sickness  insur- 
ance societies  during  the  period  1885  to  1907. 

TABLE    65. — NUMBER    OF    SICKNESS    INSURANCE   SOCIETIES, 
BY   CLASS,    1885-1907 


Year 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

Independent 
State 

Total 

1885 

7,'25 

3,700 

5,500 

IOI 

224 

1,818 

474 

18,942 

1888 

7.852 

3,893 

5,868 

•35 

401 

1,853 

466 

20,468 

1892 

8,253 

4,243 

6,316 

123 

47' 

'-739 

443 

21,588 

1893 

8,234 

4,328 

6,434 

"5 

483 

1,361 

271 

21,266 

1898 

8,512 

4,585 

7-  '39 

84 

606 

1,422 

259 

22,607 

1903 
1904 

8,548 
8,5  '3 

4-7  '5 
4,709 

7,655 
7,695 

46 
45 

667 
68  1 

1,436 
1,380 

204 

170 

23,271 
23,193 

1905 

8,333 

4,740 

7-774 

44 

710 

1,364 

162 

23-127 

1906 

8,366 

4,74' 

7-823 

46 

744 

'.339 

'55 

23,214 

1907 

8,290 

4-757 

7,914 

4' 

76, 

',3'8 

'5' 

23,232 

Miners'  societies  (Knappschaftskassen)  are  not  included, 
as  workingmen  of  this  industry  are  protected  by  special  compul- 
sory legislation,  antedating  the  law  of  1883.  The  general  annual 
reports  of  the  department  of  labor  do  not  include  their  statistics. 

It  will  be  observed  that  the  communal  societies  are  the 
most  numerous;  the  factory  societies  follow  and  the  local  trades 
societies  come  next.  The  voluntary  mutual  aid  societies  are  grad- 
ually decreasing  in  number.  From  the  beginning,  the  govern- 
ment designed  to  destroy  these,  and  replace  them  by  the  com- 
pulsory societies;  but  this  proposal  raised  a  storm  of  opposition 
against  the  bill  and  it  was  decided,  as  a  matter  of  expediency,  to 
permit  the  voluntary  societies  to  exist,  side  by  side  with  the  com- 
pulsory. As  they  do  not  receive  contributions  from  employers, 
the  amount  of  their  benefits  is  often  either  less  than  those  given  in 
compulsory  societies  or  the  cost  is  higher  to  members.  These 
conditions  coupled  with  their  frequent  mismanagement  have 
driven  many  to  the  wall.  Yet  in  certain  quarters  workmen 
prefer  to  insure  with  a  voluntary  society,  because,  it  is  said,  they 

236 


GERMANY 


can  obtain  employment  more  readily,  since  the  employer  is  not 
compelled  to  pay  any  part  of  the  cost. 

Table  66  shows  the  number  insured  in  the  various  classes 
of  societies. 

TABLE    66. — NUMBER    INSURED    IN    SICKNESS    INSURANCE 
SOCIETIES,     1885-1907 


Inde- 

Year 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

pendent 
State 

Total 

1885 

586,584 

1,  534,888  j  1,261,200 

12,  1  15 

24,879 

739,722 

143.785 

4,294.173 

1888 

882,244 

2,200,937 

'.459.737 

26,964 

50.447 

752,918 

143,214 

5,516,461 

1892 

1,099,339 

2,776,59' 

',693.342 

16,094 

61,470 

749,576 

1  17,326 

6,513,738 

1893 

'.'55-450 

3,020,654 

1,761,791 

18,290 

77,980 

659,220 

61,350 

6.754.735 

1898 

'.324.755 

3,900,781 

2,297,803 

12,287 

139,187 

772,433 

55-399 

8,502,645 

1903 

1,417,620 

4,807,473 

2,568,363 

'3-487 

214,565 

835,227 

40,748 

9,897.483 

1904 

1,423.617 

5,153,744,2,705,220 

18,895 

229,880 

852,112 

37.552 

10,421,020 

1905 

1,434,697 

5,470,141 

2,876,589 

20,403 

245,340 

856,280 

36,819 

10,940,269 

1906 

1,445.883 

5,804,587 

3,025,780!  11,383 

236,198 

878,068 

36,015  11,437,914 

1907 

1,475,489 

5.9'5."4 

3,146,386 

15,222 

240,087 

893,330 

36,  1  68  1  1,721,796 

To  this  total  there  should  be  added  758,706  miners  insured 
in  miners'  societies,  making  12,480,502  in  1907,  insured  against 
sickness,  or  19  per  cent  of  the  population. 

TABLE    67. — AVERAGE    NUMBER   OF    MEMBERS    PER    SICKNESS    IN- 
SURANCE   SOCIETY,    1885-1907 


Inde- 

Year 

Com- 
munal 

Local 

Fac- 
tory 

Build- 
ing 

Guild 

Mutual 
Aid 

pendent 
State 

All 
Societies 

1885 

83 

4'5 

230 

146 

1  1  1 

404 

303 

228 

1888 

I  12 

587 

247 

248 

'4' 

409 

310 

280 

1892 

'5' 

710 

278 

288 

162 

469 

303 

33' 

•893 

'57 

280 

335 

191 

495 

238 

1898 

'72 

892 

324 

244 

264 

54' 

225 

39? 

1903 

182 

1.057 

339 

382 

348 

624 

209 

447 

1904 

,85 

'.'37 

354 

554 

370 

624 

222 

47' 

1905 

189 

1,194 

369 

599 

377 

635 

229 

492 

1906 

191 

'.257 

387 

553 

360 

666 

234             5  '3 

1907 

'95 

1,306 

404 

505 

35' 

691 

238 

532 

While  the  number  of  societies  has  increased  only  23  per  cent 
since  1885,  the  membership  has  increased  173  per  cent  in  the  same 

237 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 

period.  Table  67  on  the  preceding  page,  shows  the  average 
number  of  members  per  society  in  each  type  during  the  same 
period. 

Not  only  have  communal,  local,  and  factory  societies 
increased  in  number,  but  they  also  show  the  largest  increase  in 
membership.  Especially  is  this  true  of  the  local  societies. 
Everywhere  there  is  evidence  of  a  strong  tendency  toward  the  dis- 
appearance of  smaller  societies  through  consolidation  into  large 
centralized  organizations.  This  is  the  chief  reform,  hoped  for 
not  only  by  workingmen  but  by  the  administrators  of  the  law. 
In  Leipsic  and  Dresden,  for  example,  where  the  sickness  soci- 
eties have  merged  into  one  local  association,  the  best  work  is 
being  done.  The  democratic  character  of  the  management  is 
still  preserved;  but  the  administration  is  much  more  economical 
and  effectual  than  in  the  societies  displaced. 

This  is  contrary  to  the  view,  still  commonly  held  in  Great 
Britain  and  the  United  States,  that  sickness  insurance  can  be 
carried  on  successfully  only  in  small  groups  where  members 
know  one  another  and  can  co-operate  to  prevent  simulation. 
It  is,  however,  maintained  in  Germany  by  employers,  by  managers 
of  societies  and  by  workmen  generally,  that  simulation  is  less  fre- 
quently successful  and  the  cost  lower  in  a  large  society.  Because 
of  their  limited  funds,  the  small  societies  cannot  employ  paid 
inspectors  to  hunt  down  simulation.  On  the  other  hand,  a  large 
communal  or  local  society,  covering  an  entire  city  or  district, 
can  employ  competent  men  to  attend  to  this  important  matter. 
These  paid  inspectors  soon  become  the  friends  of  the  families  whom 
they  visit  and  aid  greatly  in  reducing  the  number  and  seriousness 
of  illnesses  by  disseminating  valuable  information  with  regard  to 
prevention,  care  and  methods  of  treatment.  At  present,  most 
of  the  societies  are  still  very  small,  fully  three-fourths  having 
less  than  500  members  and  nearly  45  per  cent  less  than  100. 
Table  68  shows  these  conditions  at  the  close  of  1907. 

The  societies  are  popular,  not  only  with  men,  but  with 
women.  The  number  of  the  latter  insured  has  increased  more 
rapidly  than  the  population.  Thus,  while  in  1907  the  number 
of  men  was  two  and  one-half  times  as  great  as  in  1885,  that  of 
women  had  quadrupled.  This  is  especially  evident  in  the  local  and 

238 


GERMANY 


TABLE     68. — NUMBER   OF    SICKNESS    INSURANCE    SOCIETIES 
ACCORDING   TO   SIZE    OF   MEMBERSHIP,    1907 


Mu- 

Inde- 

Number of  Members 

Commu- 
nal 

Local 

Fac- 
tory 

Build- 
ing 

Guild 

tual 
Aid 

pendent 
State 

Total 

Less  than       100 

6.468 

383 

2,697 

20 

288 

438 

94 

10,388 

101  to      500 

1-549 

2,366 

3.96i 

20 

285 

755 

98 

9,034 

501     "    1,000 

247 

932 

654 

3 

53 

121 

7 

2,017 

1,001     '    2,000 

170 

549 

205 

2 

24 

64 

3 

1,017 

2,001     '    5,000 

81 

339 

90 

'3 

33 

2 

558 

5,001     '  10,000 

25 

90 

26 

I 

2 

9 

'52 

10,001     '  20,000 

6 

42 

18 

2 

8 

76 

Over      20,000 

2 

14 

4 

8 

28 

Total    . 

8,548 

4.715 

7.655 

46 

667 

1,436 

2O4 

23,271 

communal  societies  of  large  industrial  cities,  where  workingwomen 
are  very  well  organized  and  can,  therefore,  be  readily  reached  by 
the  authorities  and  required  to  obey  the  law.  Table  69  shows  the 
numerical  relation  existing  between  the  two  sexes  in  all  the 
societies,  taken  together. 

TABLE  69. — NUMBER  OF  MEN  AND  WOMEN  IN  SICKNESS  INSURANCE 
SOCIETIES,   1885-1907 


Year 

Men 

Women 

Number  of  Women 
•per  loo  Men 

1885 

3.5i5.275 

778,898 

22 

1888 

4.4>5.445 

983,033 

22 

1892 

5,5>°.52i 

',444,528 

26 

1893 

5,557.379 

1,549,425 

27 

1898 

6,783,118 

1,986,939 

29 

1903 

7,677,617 

2,546,680 

33 

1904 

8,023,919 

2,686,801 

33 

1905 

8,349,779 

2,834,697 

34 

1906 

8,696,555 

2,992,833 

34 

1907 

8,972,210 

3,166,756 

35 

The  records  of  sickness  and  deaths,  compiled  by  the  Ger- 
man government,  are  of  the  greatest  value.  They  constitute 
the  most  complete  body  of  vital  statistics  of  workingmen  in 

239 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

existence.  Four  things  are  of  the  highest  importance:  first,  the 
number  of  cases  of  disability;  second,  their  average  duration; 
third,  the  number  of  days  of  sickness  per  member;  and  fourth, 
the  death-rate.  For  our  present  purposes,  it  is  sufficient  to 
give  the  facts  for  certain  typical  years  and  for  all  societies,  taken 
together.  It  must  be  remembered,  however,  that  the  figures 
given  in  the  accompanying  Table  70,  include  only  such  cases  of 
sickness  as  involved  the  payment  of  sick  benefit  or  of  hospital 
service;  usually  sicknesses  of  less  than  three  days'  duration  are 
wholly  omitted. 


TABLE  70. — PER  CENT   AND  DURATION  OF    SICKNESS  AND  PER   CENT 
OF  DEATHS  IN   SICKNESS  INSURANCE  SOCIETIES,   1888-1907 


1888 

1892 

1903 

1904 

1905 

1906 

1907 

(i)  Cases  of  sick- 

Men 

33-S 

36.8 

38.3 

40.9 

41.4 

39-4 

42.7 

ness  per  year 

>•  Women 

28.8 

31.1 

33.0 

35-4 

35.0 

33-4 

35.6 

per  i  oo  insured 

Both  Sexes 

32.6 

35-6 

37.0 

39-5 

39-8 

37-8 

40.8 

(2)  Average  num-  ' 
her     of     days 
of  sickness  per 
case 

Men 
•  Women 
Both  Sexes 

16.6 

18 

17.0 
•7-3 

18.1 
21.9 
19.0 

,8.7 
23.2 
19.7 

18.7 

23-5 
19.8 

.8.5 
24.1 
19-8 

,8.5 
23.4 
19.6 

(3)  Days  of  sick- 
ness per  annum 
per  100  in- 
sured 

Men 
>•  Women 
Both  Sexes 

555-6 
508.3 
547-0 

626.6 

569-7 
614.7 

695-3 
720.4 
701.5 

762.1 
822.9 
777-4 

775-9 
921.9 

787-5 

728.6 
804.7 
748.1 

788.7 
833.1 
800.3 

(4)  Deaths  per  100 
insured 

Men                  i  .00 
•  Women              .77 
Both  Sexes  |       .96 

1.03 

'74, 
.98 

.86 
.61 

.80 

i4 
•65 

.80 

.86 

•64 

.81 

.81 
.60 

76 

i4 
.61 

-78 

Division  (i)  of  the  preceding  table  shows  a  steady  progres- 
sive increase  in  the  amount  of  sickness  during  the  period  under 
observation.  This  is  not  equally  marked  in  the  two  sexes, 
women  enjoying  greater  freedom  from  sickness  than  men,  not 
only  in  the  totals,  but  also  in  each  type  of  society.  In  view  of 
the  fact  that  the  amount  of  sickness  increases  with  age,  it  has 
been  suggested  that  the  above  condition  may  be  due  to  the  higher 
average  age  of  the  men;  but  a  more  important  factor  undoubtedly 

240 


GERMANY 


is  the  greater  risk  of  accident  in  the  trades  in  which  men  are 
employed.  The  number  of  cases  of  sickness  among  the  two  sexes 
differs  considerably  with  the  type  of  society.  This  is  clear  from 
the  following  figures,  the  average  for  20  years  from  1888-1907. 

TABLE   71. — AVERAGE  NUMBER   OF   CASES   OF   SICKNESS    FOR    BOTH 

SEXES    PER     IOO    INSURED    IN    SICKNESS    INSURANCE 

SOCIETIES,   1888-1907 


Sex 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

Indepen- 
dent State 

Total 

Men 
Women 

27-3 

22.2 

37i 
33.6 

44-7 
37-4 

58.3 
47-3 

321 
26.6 

37-3 
33-7 

31.2 

28.8 

38.0 
32.1 

The  average  duration  of  sickness — see  Division  (2)  of 
Table  70 — has  also  increased,  women  showing  longer  periods. 
This  is  so  marked  that,  in  spite  of  the  fewer  cases  of  sickness, 
their  coefficient  of  morbidity,  namely,  duration  of  sickness  per 
member  each  year,  is  greater  than  that  for  men, — see  Division  (3). 
Similar  conditions  have  been  found  to  prevail  in  other  countries; 
and  may  be  explained  by  the  greater  recuperative  power  of  men 
together  with  their  greater  need  to  return  to  work. 

These  conditions  suggest  serious  difficulties  in  connection 
with  the  efficiency  of  compulsory  insurance.  Opponents  of  the 
law  have  argued  that  this  form  of  relief  inevitably  leads  to  an 
increase  in  the  amount  of  simulation,  and  contend  that  the  self- 
respect  of  the  insured  is  constantly  endangered  by  opportunities 
offered  for  deception.  The  authorities,  on  the  other  hand,  have 
maintained  that  this  increase  is  to  be  explained  on  entirely 
different  grounds,  (i)  The  amendment  of  1903  extended  the 
period  of  benefit  from  13  to  26  weeks.  (2)  Benefits  are  now 
granted  in  cases  of  venereal  disease,  which  are  often  of  long 
duration.  (3)  At  the  present  time,  sicknesses  are  more  closely 
reported  than  heretofore,  working  people  better  understanding 
their  rights.  The  authorities  have  also  pointed  out  that  maling- 
ering and  simulation  would,  for  the  ordinary  workingman,  be 
unprofitable..  He  receives  no  benefit  until  after  three  days  and 
then  only  half  the  current  rate  of  wages.  On  this  he  and  his 
'6p  241 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

family  cannot  live.  The  authorities  insist,  therefore,  that  increase 
of  sickness  is  genuine  and  is  due  in  Germany  to  the  stress  and 
strain  of  modern  industry.  Hours  of  labor  vary  from  8  to  15 
per  day.  The  large  stores,  for  instance,  open  at  8  A.  M.  and  close 
at  8  P.  M.,  allowing  one  hour  for  luncheon.  It  has  been  ascer- 
tained that  in  those  factories  where  the  hours  are  longest,  the 
greatest  number  of  cases  of  accident  and  sickness  occur.  Many 
workmen  continue  to  work  even  when  really  incapacitated,  and 
only  when  the  slack  season  comes  do  they  take  advantage  of 
the  opportunity  to  consult  a  physician.  This,  it  is  asserted, 
accounts  for  the  increase  of  sickness  during  such  periods  which 
others  ascribe  to  simulation  and  malingering. 

The  more  radical  program  favored  by  Social  Democrats 
would  compel  workingmen  to  submit  to  medical  examination  once 
or  twice  a  year,  and  should  the  physician  order  a  rest,  would  com- 
pensate for  it  by  sickness  insurance.  This  would,  of  course, 
tend  to  prevent  much  disability  and  promote  greater  efficiency. 
While  such  a  policy  would  perhaps  increase  the  number  of  com- 
pensated cases  of  sickness,  it  would  also,  it  is  claimed,  reduce  the 
aggregate  cost  by  leading  to  greater  efforts  to  prevent  industrial 
diseases. 

Turning  finally  to  Division  (4)  of  Table  70,  we  observe  that 
the  death-rate  in  these  sickness  societies  has  decreased  consider- 
ably in  the  period  under  discussion.  This  is  in  agreement  with  the 
general  conditions  existing  in  the  population  at  large.  But  in 
this  particular  instance,  the  reduction  may  be  ascribed  to  some 
extent  to  the  positive  effort  on  the  part  of  the  societies  to  lessen 
the  death-rate,  as  well  as  the  amount  of  morbidity,  by  circulating 
information  on  social  hygiene  among  their  members.  In  the  larger 
cities,  especially,  this  plan  is  widely  developed. 

Attention  will  now  be  turned  to  the  specific  benefits  given  by 
the  various  societies  in  case  of  sickness.  As  has  been  stated  these 
consist  of  medical  treatment,  medicines,  hospital  service  when 
necessary,  care  of  convalescents,  sick  benefits  and,  in  case  of 
death,  a  funeral  benefit.  We  will  now  take  up  each  one  of  these 
items  in  succession.  Table  72  gives  the  total  cost  per  annum 
as  well  as  the  average  cost  per  member  of  medical  treatment 
and  medicines  in  the  various  classes  of  societies. 

242 


GERMANY 


TABLE     72. — TOTAL    AND   AVERAGE   COST    OF    MEDICAL   TREATMENT 
AND    MEDICINES,    SICKNESS    INSURANCE    SOCIETIES,    1885-1907 


Year 

Medical 
Treatment 

Per 

Member 

Medicines 

Per 

Member 

Total 
Per 

Member 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1885 

9,060,945 

2.15 

7,072,016 

..69 

3.84 

1888 

12,523,435 

2.32 

9,946,684 

1.84 

4.16 

1892 

19,068,892 

2.74 

16,039,356 

2.31 

5.05 

1893 

21,423,856 

3.01 

17,693,412 

2.49 

5.50 

1898 

29,107,863 

3.32 

22,01  1,200 

2.51 

5.83 

1903 

40,765,699 

3-99 

28,905,813 

2.83 

6.82 

1904 

47,914,471 

4-47 

32,139,348 

3.00 

7-47 

1905 

53-"3.'37 

4-75 

34,634,237 

3.10 

7-85 

1906 

57,293,080 

4.90 

36,021,712 

3.08 

7.98 

1907 

63,325,782 

5.22 

40,157,749 

3-3' 

8.53 

TABLE   73. — TOTAL   COST  OF  HOSPITAL  SERVICE,  SICKNESS    INSURANCE 
SOCIETIES,    1902-1907 


Year 

Com- 
munal 

(Marks) 

Local 
(Marks) 

Factory 
(Marks) 

Build- 
ing 

(Marks) 

Guild 

(Marks) 

Mutual 
Aid 

(Marks) 

Inde- 
pendent 
State 
(Marks) 

Total 
(Marks) 

1902 
1903 
1904 
1905 
1906 
1907 

3,106,691 
3,284-735 
3,75',  5" 
3,957-282 
3,91  1,256 
4-  247-0  '4 

1  1  ,086,980 
12,504,569 
14,938,812 
16,550,155 
17,792,438 
19,631,249 

5,107,402 
5,579,440 
6,497,  1  20 
7,287,556 
8,1  15,967 
9,341,766 

87>5°3 
114-590 
'33-379 
156,311 
127,412 
109,920 

759,291 
882,449 
1,041,623 
1,163,659 
1,178,254 
1,244,606 

1,160,141 

1,257,865 
1,295,009 

1,421,323 
1,49(3,036 
1,542,421 

34-977 
35-'77 
36,93' 
49,1  18 
48,711 
50,659 

21,342,985 
23,658,831 
27,694,385 
30,585,404 
32,670,074 
36,167,635 

TABLE    74. — AVERAGE    COST   OF    HOSPITAL    SERVICE     PER    MEMBER, 
SICKNESS    INSURANCE    SOCIETIES,    1885-1907 


Inde- 

Year 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

pendent 
State 

Total 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1885 

1.90 

.1  1 

0.8  1 

6.70 

,.76 

0.60 

0.43 

.04 

1888 

'•44 

-47 

0.98 

4-37 

1.95 

0.75 

0.55 

•23 

1892 

'•55 

•74 

1.27 

5.11 

2.59 

0.92 

0.51 

.50 

.893 

1.67 

.84 

'•34 

5.68 

2.58 

.07 

0.82 

.63 

1898 

,.85 

•97 

1.64 

4-94 

2.77 

.16 

1.03 

.81 

1903 

2.19 

2.51 

2.17 

6.96 

3.82 

•42 

0.85 

2.31 

1904 

2.48 

2.80 

2.41 

5.87 

4.18 

•^ 

0.99 

2.59 

1905 

2.59 

2-94 

2-57 

6.21 

4.41 

.66 

'•33 

2.73 

1906 

2.54 

2-99 

2.71 

5.6, 

4.46 

.69 

'•34 

2.79 

1907 

2.71 

3-'7 

2.96 

5.58 

4.70 

•7' 

1.41 

2.98 

243 


INSURANCE   AGAINST  SICKNESS   AND   DEATH 


The  effectiveness  of  the  societies  has  been  constantly 
extended.  Medical  treatment  per  member  in  1907  cost  two  and 
one-half  times  as  much  as  in  1885,  and  the  same  is  true  of  the 
cost  of  medicines.  Tables  73  and  74  on  the  preceding  page  show 
the  total  cost  of  hospital  service  per  society  and  the  average 
cost  per  member.  Table  75  shows  the  cost  of  the  care  of  con- 
valescents. This  latter  form  of  aid  is  still  of  limited  extent,  but 
it  appears  to  be  increasing,  especially  in  the  larger  local  societies 
which  establish  convalescent  homes.  In  time  it  is  sure  to  become 
a  large  item  of  expenditure. 

TABLE    75. — TOTAL    COST  OF   CARE   OF    CONVALESCENTS,     SICKNESS 
INSURANCE    SOCIETIES,    1902-1907 


Year 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

Inde- 
pendent 
State 

Total 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks') 

(Marks) 

(Marks) 

1902 

57 

93-5  '9 

46,43° 

250 

509 

2,701 

'53 

143-619 

1903 

'57 

109,068 

43,121 

43 

1,047 

3,512 

97 

'  57.405 

1904 

2,058 

104,009 

38,488 

81 

2,278 

2,257 

597 

149,768 

1905 

282 

1  20,786 

38,549 

4 

1,652 

3,060 

268 

164,601 

1906 

1,634 

1  27,  1  26 

40,414 

3 

2,871 

2,992 

71 

175,111 

1907 

1,615 

'53>7'8 

42,171 

3,046 

3,859 

167 

204,576 

TABLE     76. — TOTAL     SICK     BENEFITS     PAID,    SICKNESS     INSURANCE 
SOCIETIES,     1902-1907 


Year 

Com- 
munal 

(Marks) 

Local 

(Marks) 

Factory 
(Marks) 

Build- 
ing 

(Marks) 

Guild 
(Marks) 

Mutual 
Aid 

(Marks) 

Inde- 
pendent 
State 
(Marks) 

Total 
(Marks) 

1902 
1903 
1904 
1905 
1906 
1907 

4.34',  i  '0 

4,469,788 

5,232,733 
5,493.288 
5,i77.96i 
5,949,305 

33,764,038 
36,856,433 
47,458,032 
50,559,781 
52,382,420 
61,681,442 

24,491,767 
26,084,446 
31,297,831 
34,439,272 
34,630,198 
40,494,061 

i73.'38 
182,172 
303,580 

378,747 
268,270 
237,646 

i  ,446,780 

',545.'63 
2,016,463 
2,226,743 

2,195,647 
2,385,760 

9,834,908 
9,649,322 
9,162,562 
9,408,165 
9,115,362 
10,364,388 

33'.76i 

326,353 
311,850 
310,979 
280,975 
303-  5'3 

74,383,502 
79,113,677 
95-783-051 
102,816,975 
104,050,833 
121,416,  1  1  5 

As  has  been  said,  the  associations  are  required  to  pay  a  sick 
benefit  equal  to  at  least  half  the  daily  wages  of  the  insured 
for  a  period  up  to  26  weeks.  They  are  permitted,  however,  to 
increase  this  amount  to  75  per  cent  of  the  daily  wages.  Thus, 
in  1907,  88.8  per  cent  paid  the  minimum  sick  benefit;  9  per  cent 

244 


GERMANY 


paid  between  50  per  cent  and  66f  per  cent;    1.2  per  cent  paid 
75  per  cent  of  the  daily  wages. 

Sick  benefits  differ  considerably  in  the  various  societies, 
as  will  be  seen  from  Tables  76  and  77  which  give  the  total 
amounts  paid  for  benefits  and  average  for  each  member. 

TABLE    77. — AVERAGE    SICK     BENEFITS    PER   MEMBER,    SICKNESS 
INSURANCE   SOCIETIES,   1885-1907 


Year 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

Inde- 
pendent 
State 

All 
Societies 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1885 

2.05 

4.21 

5-75 

7-74 

3.87 

10.35 

9.00 

5.58 

1888 

2.15 

4.38 

6.06 

6.1  1 

3..8 

9.78 

9.01 

5-37 

1892 

2.39 

5.40 

7-39 

7.24 

4.31 

12.59 

11.38 

6.32 

1893 

2.70 

5-94 

8.35 

8.14 

4.66 

10.69 

8-95 

6.44 

1898 

2.32 

5-74 

8.30 

8-39 

4-75 

9.69 

7.67 

6.20 

1903 

2.98 

7.41 

10.13 

1  1.07 

6.70 

10.88 

7-85 

7-74 

1904 

3-45 

8.89 

1  1.62 

'3-37 

8.10 

10.73 

8.35 

48.9 

1905 

3.60 

8.97 

12.14 

15.04 

8.44 

10.96 

8.41 

9.19 

1900 

3.36 

8.80 

11.58 

i\.  Si 

8.3, 

10.31 

7.72 

8.90 

1907 

3.80 

9.96 

12.83 

12.06 

9.02 

11.47 

8.43 

10.00 

Increase 

since  1888 

76.7% 

127-4% 

"1.7% 

97-4% 

183.6% 

'7-3% 

*6.4% 

86.2% 

*  Deficit. 

It  will  be  seen  from  the  foregoing  that  there  has  been 
not  only  a  marked  increase  in  the  amount  of  sickness,  but  in 
the  amount  of  sick  benefit  paid  per  member.  Thus,  in  the  period 
from  1885  to  1907,  the  sum  has  risen  from  5. 58  marks  ($1.40)  to 
10  marks  (12.50)  per  member  for  all  the  societies  taken  together. 
Individually,  there  is  the  greatest  diversity  from  the  small  bene- 
fit of  3.80  marks  (95  cents)  in  the  communal  societies  in  1907  to 
12.83  marks  ($3.21)  in  the  factory  clubs.  The  "independent 
state"  societies  alone  paid  in  1907  a  smaller  benefit  than  in  1885. 
which  may  be  one  more  indication  of  their  early  extinction. 

Table  78  gives  the  average  cost  of  death  benefit  in  sick 
clubs.  It  will  be  observed  that  only  four  classes  of  societies  are 
included,  since  neither  the  communal  nor  the  two  forms  of  aid 
societies  are  required  by  law  to  pay  this  kind  of  assistance.  In 

245 


INSURANCE    AGAINST    SICKNESS    AND    DEATH 


these  four  classes  of  societies,  the  minimum  death  benefit  is  fixed 
by  law  at  twenty  times  the  daily  wages,  but  under  certain  condi- 
tions a  somewhat  larger  sum  may  be  paid.  A  partial  benefit  may 
also  be  paid  at  the  death  of  either  the  wife  or  children  of  the 
insured.  The  figures  given  below  including  these  partial  benefits 
do  not,  therefore,  represent  the  exact  amounts  paid  at  the  death 
of  members,  but  are  somewhat  higher. 

TABLE    78. — AVERAGE   AMOUNT  OF   DEATH    BENEFITS,    SICKNESS 
INSURANCE    SOCIETIES,    1892-1907 


Societies 

1892 
(Marks) 

1893 
(Marks} 

1900 
(Marks') 

1903 

(Marks) 

1904 

(Marks) 

1905 

(Marks) 

1906 

(Marks) 

1907 
(Marks) 

-ocal 
7actory 
building 
3uild 

47-79 
83.88 
31.24 
50.86 

50.14 
96.06 
51.02 
56.32 

57-  '7 
1  07.74 
64.76 
61.84 

60.55 
112.77 
52.60 
65.94 

65.76 

117.48 

P'7A 
67.98 

66.84 
115.05 

58.99 
71.18 

69.09 
120.18 
58.«3 
73-7  1 

71.05 
123.03 
64.05 
74-03 

Ml 

61.42 

66.60 

74-72 

77-55 

82.13 

82.06 

85-15 

87.13 

The  amount  of  sick  benefits  for  women  after  confinement  is 
shown  in  the  following  table. 


TABLE  79. — MEMBERSHIP  AND  AMOUNT  OF  SICK   BENEFITS,  INCLUD- 
ING  THOSE    FOR   WOMEN    BEFORE    AND   AFTER   CONFINEMENT, 
SICKNESS    INSURANCE    SOCIETIES,    1903-1907 


AVERAGE  NUMBER  OF 

Benefits  for 

AVERAGE  BENEFITS 

INSURED 

Women 

PER  INSURED 

confined, 

Societies 

Year 

and,  since 

1  904,  be- 

All 

Women 

Both  Sexes 

fore  confine- 

Women 

Members 

ment 

(Marks) 

(Marks) 

(Marks) 

f 

1903 

'.377-243 

4,975,322 

1,687,051 

1.22 

0.34 

Local 

1905 
1907 

1,603,220 
i  ,872,634 

5,637,390 
6,  1  94,  1  08 

2,936,499 
3,681,079 

,.83 

1.97 

0.52 
0.59 

f 

1903 

538,168 

2,573,621 

i  ,  1  20,9  1  5 

2.08 

0.44 

Factory      1 

1905 

579.'72 

2,835,723 

1,562,126 

2.70 

0.55 

1 

1907 

627,151 

3,156,221 

1,751,620 

2.79 

0.55 

246 


GERMANY 


TABLE  79  (continued). 


AVERAGE  NUMBER 

Benefits  for 

AVERAGE  BENEFITS 

INSURED 

Women 

PER  INSURED 

confined, 

Societies 

Year 

and,  since 

Women 

Both  Sexes 

1904,  be- 
fore confine- 

Women 

All 

Members 

ment 

(Marks) 

(Marks) 

(Marks') 

{ 

1903 

302 

'6,459 

246 

0.8  1 

O.OI 

Building     \ 

1905 

468 

25,177 

742 

1.59 

0.03 

i 

1907 

56, 

19,697 

488 

0.87 

O.O2 

f 

1903 

37-  '83 

230,802 

26,608 

0.72 

O.I  2 

Guild         \ 

1905 

47.456 

263,787 

56,297 

1.19 

O.2I 

\ 

1907 

37.343 

264,604 

35,281 

0.94 

0.13 

Mutual 
Aid 

1903 
1905 

81,065 
78,809 

887,130 
858,428 

'5-777 
22,434 

0.19 
0.28 

O.O2 
0.03 

1907 

81,522 

903,560 

24,143 

0.30 

0.03 

Indepen-    1 
dent  State  1 

1903 
1905 
1907 

7,540 
6,281 
5,892 

36978 
36,020 

73' 
780 
640 

0.  10 
0.12 
O.I  I 

O.O2 
O.O2 
O.O2 

Table  80  shows  the  aggregate  sums  annually  disbursed  for 
disability  and  death  benefits  by  the  different  classes  of  societies. 

TABLE    8O. — TOTAL    DISABILITY  AND   DEATH    BENEFITS,  SICKNESS    INSUR- 
ANCE   SOCIETIES,   1902-1907 


Year 

Com- 
munal 

(Marks) 

Local 
(Marks') 

Factory 
(Marks) 

Build- 
ing 

(Marks) 

Guild 
(Marks) 

Mutual 
Aid 

(Marks) 

Inde- 
pendent 
State 
(Marks) 

Total 
(Marks) 

1902 
1903 
1904 
1905 
1906 
1907 

13,746,210 
14,448,586 
16,652,926 
17,544,831 

i7.379,304 
19,080,015 

77,990,052 
85,915,680 
106,317,716 
115,614,536 
122,388,950 
139,248,066 

55,4'4,705 
59,166,971 
68,836,011 
75,402,362 
78,673,748 
89,976,134 

384,742 

489,787 
662,065 
805,027 

564,277 
547,832 

3,498,773 
3,906,725 
4,841,565 

5-372,953 
5-325,936 
5,720,709 

16,090,598 
16,249,304 

'^8A'3S3 
16,848,185 

16,844,273 
18,667,642 

676,296 
664,624 
639,826 
655,992 
617,1  16 
647,  1  08 

167,801,376 
180,841,677 
213,931,462 
232,243,886 
241,793,604 
273,887,506 

Of  greater  value,  however,  are  the  figures  in  Table  81,  show- 
ing the  combined  disbursements  in  benefits  per  member  insured. 
It  will  be  seen  that  of  all  these  societies  in  1907,  factory  organi- 
zations paid  the  most,  namely,  28.51  marks  ($5.70)  per  mem- 
ber; and  communal  societies,  the  least,  12.19  marks  ($2.44). 

247 


INSURANCE    AGAINST    SICKNESS    AND    DEATH 


The  marked  diversity  of  cost  in  the  various  societies  shows 
not  only  in  the  different  amounts  of  benefit  per  member,  but 
even  more  in  the  relation  of  the  individual  items  of  benefit  to 
one  another.  Communal  societies,  for  example,  pay  no  confine- 
ment or  death  benefits,  but  give  a  relatively  larger  sum  for  medi- 
cal care  and  medicines. 

TABLE  8l. — TOTAL  BENEFITS  PER  MEMBER,  SICKNESS   INSURANCE 
SOCIETIES,  1885-1907 


"fear 

Com- 
munal 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

Indepen- 
dent State 

All 
Societies 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1885 

6.80 

9.60 

13.87 

23.44 

8.49 

12.30 

1  1.76 

1  1.04 

1880 

6.83 

10.49 

14.66 

16.5  1 

8.49 

12.44 

12.28 

1  1.40 

1892 

7-74 

12.69 

17.63 

19.29 

I  1.  12 

16.20 

'5-53 

'3-55 

1893 

8.27 

,3.56 

19.20 

21.80 

1  1.65 

16.38 

'5-55 

'4-35 

1898 

8.00 

13.89 

'9-47 

22.27 

12.56 

16.27 

15.04 

14.60 

1903 

9.64 

17.27 

22.99 

29.76 

16.93 

18.32 

.5.98 

17,69 

1904 

10.99 

19.92 

25-55 

29.15 

19.44 

18.72 

17.12 

19.97 

1905 

11.49 

20.51 

26.59 

3  '-97 

20.37 

19.63 

«7-74 

20.76 

1906 

11.28 

20.57 

26.30 

24.85 

20.  1  6 

19.05 

16.95 

20.68 

1907 

12.19 

22.48 

28.51 

27.81 

21.62 

20.66 

17.97 

22.56 

The  following  table,  for   1907,  shows  how  every  100  marks 
of  benefits  are  distributed  in  the  seven  forms  of  benefit. 

TABLE  82. — PERCENTAGE  OF  VARIOUS  KINDS  OF   BENEFITS  PAID, 
SICKNESS    INSURANCE    SOCIETIES,   1907 


Societies 

Physi- 
cians 

Medi- 
cines 

Sick 
Bene- 
fit 

Lying- 
in 
Bene- 
fit 

Death 
Bene- 
fit 

Hos- 
pital 
Cost 

Care 

r°f 
Conva- 
lescents 

Total 

Communal 

30.48 

16.07 

31.18 

o.oo 

o.oo 

22.26 

O.OI 

100 

Local  . 

21.69 

14.63 

44.30 

2.64 

2-53 

14.10 

O.I  I 

100 

Factory 

24.29 

15.19 

45.01 

1.95 

3-'3 

10.38 

0.05 

IOO 

Building     . 

25.56 

9-44 

43-38 

0.09 

1.46 

20.07 

o.oo 

IOO 

Guild  . 

21.22 

12.31 

41.70 

0.62 

2.34 

21.76 

0.05 

IOO 

Mutual  Aid 

21.17 

11.71 

55-52 

0.13 

3.19 

8.26 

0.02 

IOO 

Independent  State 

21.25 

16.53 

46.90 

O.  IO 

7-37 

7-83 

0.02 

IOO 

All  societies 

23.11 

14.66 

44-33 

2.01 

2.60 

13.21 

0.08 

IOO 

248 


GERMANY 

It  will  be  remembered  that,  with  the  exception  of  mutual 
aid  societies,  contributions  of  workmen  and  employers  are  two- 
thirds  and  one-third,  respectively,  of  the  total  cost.  The  statute 
in  each  case  limits  the  amount  of  total  contributions  to  a  certain 
percentage  of  the  wages.  In  communal  sick  funds,  for  example, 
the  minimum  contribution  is  1.5  per  cent  of  the  wages,  which 
upon  the  approval  of  the  imperial  authorities,  may  be  increased  to 
as  high  as  3  per  cent.  Other  societies  may  collect  contributions 
up  to  as  high  as  6  per  cent  of  the  wages,  if  necessary.  These 
figures  include  the  contributions  of  both  employers  and  employes. 

Table  83  shows  the  average  conditions  as  to  contributions 
existing  in  the  societies  taken  together. 

TABLE     83. — PERCENTAGE     OF     SICKNESS     INSURANCE     SOCIETIES 
COLLECTING   GIVEN    PERCENTAGES   OF   WAGES,   1885-1907 


PER  CENT  c 

>F  WAGES  Co 

LLECTED 

Year 

Less  than  i$ 

i  to  2 

2  to  3 

3*<>4 

4/06 

1885 

537 

20.2 

25-3 

0.8 

1888 

49-9 

19.8 

28.5 

1.8 

1892 

45.8 

22.2 

29.7 

2-3 

'893 

43-4 

22.3 

3'-3 

3-0 

1898 

37-3 

25.0 

33-4 

4-3 

1903 

33.2 

25'3 

35-2 

6.3 

1904 

28.5 

20-5 

40.1 

10.6 

0.3 

1905 

26.5 

19.4 

41.0 

12.7 

0.4 

1906 

25.6 

,8.5 

41.4 

13.9 

0.6 

1907 

24.2 

18.1 

41.7 

15.2 

0.8 

In  1907,  the  ratio  of  the  contributions  to  wages  in  the  greater 
number  of  the  societies  was  between  2  and  3  per  cent,  although  in 
1885  it  was  only  i£  per  cent.  Two-thirds  of  the  cost  of  the  in- 
creased benefits,  pointed  out  in  the  preceding  tables,  falls  upon 
members  themselves  and  only  one-third  upon  employers. 

Tables  84  and  85  show  the  aggregate  and  individual  con- 
tributions of  members  in  the  various  classes  of  societies.  These 
figures  also  include  the  additional  sums  paid  for  the  protection 
of  members'  families  in  cases  of  sickness  and  death. 


249 


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oooooooo  c^c-a-c^  c~--  j; 

1| 

1 

250 


GERMANY 


We  will  now  compare  the  contributions  of  members  with 
the  benefits  paid  by  the  societies.  The  following  table  shows 
this  for  the  years  1906-1907. 

TABLE    86. — BENEFITS    AND    CONTRIBUTIONS,  SICKNESS    INSURANCE 
SOCIETIES,     1906    AND    1907. 


Benefits  of  all  kinds 
Contributions  of  employers 
Contributions    of    workmen, 
entrance    fees    and    addi- 
tional   premiums  for   pro- 
tection of  families 
Excess  of  benefits  over  con- 
tributions of  workmen 


1906 
(Marks) 
241,793,604 
84,630,276 


192,034,336 
49,759,268 


1907 

(Marks) 

273,887,506 

92,174,982 


208,204,204 
65,683,302 


In  1907  the  average  payment  per  person  was  17.15  marks 
(14.29);  the  average  total  benefits  per  member  were  22.56  marks 
(15.64),  a  net  average  excess  of  benefits  per  member  of  5.41 
marks  ($1.35).  Table  87  shows  this  excess  for  each  class  of 
society. 

TABLE   87. — AVERAGE   BENEFITS  AND  CONTRIBUTIONS  PER  MEMBER, 
SICKNESS    INSURANCE    SOCIETIES,    1907 


Societies 

Benefits 

Average  Contribu- 
tions of  Workmen 

Excess  of  Benefits 
over  Contributions 

(Marks) 

(Marks) 

(Marks) 

Factory   . 

28.51 

19.84 

8.67 

Building 

27.81 

20.95 

6.86 

Local 

22.48 

17.20 

5.28 

Guild       . 

21.62 

17.11 

4.51 

Communal 

12.19 

8.,7 

4.02 

Independent  State 

17.97 

17.88 

0.09 

Mutual  Aid     . 

20.66 

22.90 

2.24* 

*  Deficit. 

Employers,  it  must  be  remembered,  make  no  contributions 
to  mutual  aid  societies.  The  above  statistics  supply  the  very  best 
evidence  of  the  value  of  this  form  of  insurance  to  workingmen. 
Cost  of  management  is  naturally  an  important  item  in  the  finances 
of  the  clubs.  In  communal  societies  this  is  paid  entirely  by  the 
communes  themselves;  in  factory  and  building  societies  it  falls  on 
the  employers;  in  mutual  aid  societies,  on  the  other  hand,  mem- 

251 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 


bers  pay  all;  and  in  other  instances  expenses  are  paid  out  of 
the  funds  of  the  society,  composed,  as  we  have  seen,  of  the  con- 
tributions of  both  employers  and  employes. 

The  following  tables,  88  and  89,  give  the  total  cost  of  manage- 
ment and  the  average  cost  of  management  per  member,  respective- 
ly, in  the  various  societies.  Communal  societies  are  not  included 
in  these  tables  as  their  expense  of  administration,  as  has  been 
said,  is  borne  by  the  commune. 

TABLE  88. — TOTAL    COST    OF    MANAGEMENT,    SICKNESS    INSURANCE 
SOCIETIES,   1902-1907 


Year 

Local 
(Marks) 

Factory 
(Marks) 

Build- 
™& 
(M'ks) 

Guild 
(M'ks) 

Mutual 
Aid 

(Marks) 

Inde- 
pendent 
State 
(Marks) 

Total 
(Marks) 

1902 
1903 

1904 
1905 
1906 
1907 

8,161,788 
8,912,181 
10,451,999 
11,000,519 

n.955.987 
13,101,063 

383.957 
462,552 
621,094 

526,735 
594.985 
665,166 

4,640 
5.985 
5.464 
4.929 
5,172 
4.382 

457-  '72 
487.263 
550,280 
599,666 

632,947 
683,007 

1,865,218 
1,900,536 
1,91  1,528 

'.979-537 
2,08  1,126 
2,182,547 

57.947 
57.8i4 
56,115 
55.940 
57.733 
56,735 

10,930,722 
1  1,826,331 
13,596,480 
14,167,326 
15.327.950 
16,692,900 

Percentage  of 
total  disburse- 
ments, 1907 

8.3 

0.7 

0.8 

10.4 

10.4 

7-7 

4-7 

TABLE   89. — AVERAGE   COST   OF  MANAGEMENT   PER   MEMBER   OF 
SICKNESS    INSURANCE    SOCIETIES,    1902-1907 


Year 

Local 

Factory 

Build- 
ing 

Guild 

Mutual 
Aid 

Inde- 
pendent 
State 

All 
Societies 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks') 

(Marks) 

(Marks) 

1902 

1.74 

0.15 

0.30 

2.IO 

2.07 

.30 

.1  1 

1903 

1.79 

0.18 

0.36 

2.1  I 

2.14 

•39 

.16 

1904 

1.96 

0.23 

0.24 

2.21 

2.24 

.50 

•27 

1905 

••95 

0.19 

O.2O 

2.27 

2-3' 

•5' 

•27 

1906 

2.OI 

O.2O 

0.23 

2.40 

2-35 

59 

•3' 

1907 

2.12 

O.2I 

O.22 

2.58 

2.42 

.58 

.38 

With  the  exception  of  the  mutual  aid  societies,  em- 
ployers are  always  represented  on  the  managing  board  to  the 
extent  of  one-third  the  members,  workingmen  electing  two- 
thirds.  This  does  not  give  employers  much  power  and,  in 

252 


GERMANY 


TABLE    90. — INCOME    AND    DISBURSEMENTS    OF    ALL    SICKNESS    IN- 
SURANCE   SOCIETIES,    1906-1907 


1906 

1907 

Income 

Per 

Per 

(Marks} 

Cent 

(Marks} 

Cent 

Cash  on  hand  on  January  i     . 

15,170,978 

4-5 

.8,885,357 

5.0 

Interest  on  capital  .... 

7,099,182 

2.1 

8,036,905 

2.1 

Entrance  fees     ..... 

1,052,184 

0.6 

1,984,294 

O  <> 

Contributions  of  employers  and  em- 

. ,-7^  *,  •  ^*t 

•  ,V^^^,      VT 

\j.y 

ployes  

273,875,783 

80.5 

297,414,398 

78.7 

Contributions  for  members'  families 

836,645 

O.2 

980,494 

°-3 

Advance  payments  according  to  law 

619,023 

0.2 

585,204 

O.2 

Additional    payments    according    to 

law        

12 

O.O 

1,056 

O.O 

Compensation    for   certain    sick    aid 

2,293,754 

0.7 

2,584,252 

°-7 

Compensation  from  accident  associa- 

tions          

2,919.252 

0.8 

3,298,924 

0-9 

From  stocks  and  bonds  sold  . 

25,908,829 

7.6 

31,815,458 

8.4 

Loans        

3,639,858 

I.I 

5,086,080 

'•3 

Other  income          .... 

4,228,348 

1.2 

5,291,864 

1.4 

Total         .... 

338,643,844 

IOO.O 

375,964,286 

IOO.O 

Disbursements 

Medical  care    

57,293,080 

I7.8 

63,325,782 

17.7 

Medicines,  etc.         .... 

36,021,712 

I  1.2 

40,157.749 

1  1.2 

Sick  benefits 

to  members   

100,876,293 

31.4 

I  I7,825,OOI 

32.9 

to  relatives  of  members 

3-  '74-  540 

1.0 

3.59I,H4 

1.0 

Aid  to  women  before  and  during  con- 

finement         

5,061,736 

1.6 

5.493.3«>l 

••5 

Death  benefits         .... 

6,521,058 

2.O 

7.'22,348 

2.O 

Cost  of  care  in  hospitals 

32,670,074 

IO.2 

36,167,635 

1O.I 

Care  of  convalescents     . 

175,111 

O.O 

204,576 

O.I 

Compensation  to  certain  classes  of  sick 

3,311,670 

1.0 

3,592,233 

I.O 

Sums  paid  back  to  members. 

255'537 

O.I 

322,901 

O.I 

Contributions  and  entrance  fees  paid 

back      

412,493 

O.I 

428,809 

O.I 

Purchase  of  stocks  and  bonds 

50,815,561 

.5.8 

51,952,368 

14.5 

Loans  paid       • 

4,61  1,  66  1 

5,023,939 

1.4 

Management  expenses    . 

'5'327,95° 

4.1 

l6,692,90O 

4-7 

Other  expenditures 

3,390,318 

I.I 

4,493,308 

1.2 

Total  

319,918,794 

IOO.O 

356.393.964 

IOO.O 

253 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 


practice,  the  management  has  been  almost  exclusively  in  the 
hands  of  workingmen.  Adjustment  of  disputed  claims  is  made 
by  a  committee,  composed  of  one  representative  of  workingmen, 
one  of  employers  and  an  impartial  referee.  Unlike  the  case 
among  accident  claimants,  it  is  rare  that  appeals  are  taken  by 
members. 

We  may  now  review  the  financial  activities  of  the  societies 
and  compare  their  total  income  and  disbursements  under  their 
respective  items.  Table  90  on  the  preceding  page  gives  the  fig- 
ures for  1906  and  1907.  In  1907,  the  total  income  and  disburse- 
ments were  distributed  among  the  societies  as  is  shown  in  Table  91. 

TABLE   91. — TOTAL   INCOME   AND  DISBURSEMENTS  OF   SICKNESS   IN- 
SURANCE   SOCIETIES   ACCORDING  TO  CLASS,    1907 


Societies 

Income 
(Marks) 

Per  Cent 
of   Total 

Disbursements 
(Marks) 

Per  Cent  of 
Total 

Communal 
Local 
Factory     . 
Building    . 
Guild 
Mutual  Aid 
Independent  State 

24,330,488 
199,560,825 
1  16,267,212 

745.053 
8,360,01  1 
25,840,089 
860,608 

6.47 
53.08 
3093 

O.2O 
2.22 
6.87 
O.23 

2  1  ,929,069 
189,363,643 
I  IO,943,OO8 
689,!26 
7.958,039 
24,697,903 
813,176 

6.1  5 

53->3 
31.13 

O.2O 
2.23 

6-93 
O.23 

Total     . 

375,964,286 

IOO.OO 

356.393.964 

IOO.OO 

It  must  not  be  supposed  that  the  individual  societies 
always  show  the  same  favorable  financial  conditions.  In  1907, 
8,383  out  of  23,232  or  36.1  per  cent,  disclosed  disbursements 
in  excess  of  income.  In  such  cases,  the  accumulation  of  a  re- 
serve from  the  year's  receipts  was,  of  course,  out  of  the  question. 
The  law  requires  the  societies  to  establish  a  reserve,  consisting  of 
one-tenth  of  the  annual  contributions,  until  a  certain  sum  shall  be 
reached.  This  is  a  fairly  reasonable  index  of  the  solvency  of  the 
organizations.  For  1907,  46.3  per  cent  were  solvent  on  this  basis. 
Table  92  shows  conditions  in  this  regard  in  the  different  classes 
of  societies. 

It  is  evident  from  the  foregoing,  that  sickness  insurance 
societies  are  not,  as  a  class,  strictly  solvent  when  tested  by  the 
reserves  necessary  to  solvency  in  voluntary  insurance  institu- 

254 


GERMANY 

TABLE    92. — NUMBER  AND   PER  CENT  OF  SOLVENT  AND  INSOLVENT 
SICKNESS  INSURANCE    SOCIETIES,    1907 


SOLVENT 

INSOLVENT 

Number  of 
Societies 

Per  Cent 

Number  of 
Societies 

Per  Cent 

Communal 

4,240 

51.1 

4,050 

48.9 

Local 

'.973 

41.5 

2,784 

58.5 

Factory  . 

3-595 

45-4 

4.3  '9 

54.6 

Building 

21 

5'-2 

20 

48.8 

Guild 

370 

48.6 

39i 

5M 

Mutual  Aid 

5OI 

38.0 

817 

62.0 

Independent  State 

49 

32.5 

1  02 

67.5 

Total 

io,749 

12,483 

tions.  They  do  not  hold  sufficient  reserves  to  cover  the  capi- 
talized value  of  their  benefits  and  to  provide  against  the  prob- 
ability of  sickness,  which  increases  as  members  become  older. 
The  obligation  to  insure,  however,  renders  it  highly  probable 
that  the  amount  required  to  pay  claims  will  be  secured  and  that 
an  equilibrium  of  cost  will  be  reached  at  an  earlier  period  than  in 
the  case  of  the  employers'  mutual  accident  insurance  companies. 
The  aggregate  reserves  of  the  societies  have  reached  a  very 
high  figure  as  Table  93  will  show. 


TABLE   93. — TOTAL  AND   AVERAGE  RESERVE  PER  MEMBER,  SICKNESS 
INSURANCE    SOCIETIES,  DECEMBER  31,    1907 


Societies 

Communal 
Local 
Factory  . 
Building  . 
Guild       . 
Mutual  Aid 
Independent  State 


Total  Reserve 
(Marks) 

5,414,800 

100,265,200 

92,818,600 

227,300 

4,005,400 

16,770,100 

837,600 


Average  Per 

Member 

(Marks') 

3.46 

16.19 

29.41 

11.54 

15.14 

18.56 

23.25 


These  reserve  funds  can  be  used  only  for  the  payment  of 
benefits.  This  has  aroused  considerable  objection,  especially 
from  members  of  the  Social  Democratic  party,  who  urge  that 
the  societies  should  be  permitted  to  use  a  part  of  their  reserve 

255 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

for  the  purpose  of  educating  their  members  on  the  subjects  of  health 
and  hygiene  through  lectures  and  pamphlets.  Their  attention 
might  in  this  way  be  directed  to  the  importance  of  proper  hous- 
ing conditions  and  proper  food,  as  well  as  to  the  dangers  of 
certain  occupational  diseases  and  the  methods  of  prevention. 

As  has  been  stated,  a  vast  number  of  private  sickness  in- 
surance societies  were  already  in  existence  at  the  time  the  com- 
pulsory law  was  enacted.  In  most  cases  these  were  very  small, 
and  granted  but  limited  benefits;  very  often  they  were  insol- 
vent. The  recognition  granted  by  the  law  gave  to  many  a  new 
lease  of  life;  but  it  soon  became  evident  that  only  by  consolidating 
several  into  one  large  central  society  could  unnecessary  duplica- 
tion of  management  expenses  be  avoided,  rates  of  benefits  be 
increased,  and  the  full  purpose  of  the  law  be  realized. 

Such  has  been  the  history  of  the  development  of  the  largest 
sickness  insurance  society  in  Germany,  the  Local  Society  of 
Leipsic.  This  institution  was  organized  as  early  as  1887,  ab- 
sorbing and  displacing  about  20  smaller  societies.  From  the 
beginning,  its  jurisdiction  was  not  confined  to  the  limits  of  the 
city  itself,  and  today  its  operation  extends  to  the  42  suburbs, 
situated  within  a  radius  of  six  kilometers.  The  society,  there- 
fore, is  the  central  institution  for  the  whole  contiguous  district. 
Its  membership  at  the  close  of  1908  was  161,051,  of  whom  109,662 
were  men  and  51,389  women.  Although  the  latter  comprise  as 
yet  only  one-third  of  the  members,  their  relative  proportion  is 
increasing  rapidly.  Of  the  total  number  15,000  are  voluntary 
members.  Nearly  every  industry  or  trade  is  represented.  The 
management  in  spite  of  the  large  membership  is  democratic.  As 
in  most  local  societies,  directors  to  whom  the  management  of 
affairs  is  intrusted  are  elected  at  a  general  meeting  held  once  a 
year.  The  general  meeting  consists  of  450  representatives,  who 
hold  office  for  three  years,  two-thirds  being  chosen  by  members 
and  one-third  by  employers.  The  board  of  directors  consists  of 
1 8  members,  divided  in  the  same  proportion,  6  employers  and  12 
workingmen.  They  also  hold  office  for  three  years;  but  at  the 
end  of  each  year,  one-third  retire  by  seniority,  two  being  em- 
ployers and  four  workingmen. 

256 


GERMANY 

,  The  prosperity  of  this  society  is  clearly  the  result  of  the 
liberal  policy  and  superior  business  skill  of  its  management. 
Not  only  are  the  various  provisions  of  the  sickness  insurance 
law  faithfully  carried  out,  but,  wherever  the  law  permits,  bene- 
fits are  increased  above  the  minimum  specified  in  the  act.  The 
members  receive  benefits  as  follows: 

(1)  Free  medical  attendance  from  the  first  day  of  sickness 
together  with  medicines,  trusses,  crutches  and  other  such  appli- 
ances. 

(2)  In  case  of  disablement,  cash  benefits  up  to  as  high  as 
15  marks  ($3.75)  per  week  for  a  period  of  34  weeks,  beginning 
after  the  second  day. 

(3)  In  place  of  the  foregoing,  free  treatment  in  a  clinic, 
hospital  or  home  for  convalescents.     A  cash  benefit  in  such  cases 
is  granted  to  members  of  the  patient's  family  dependent  on  his 
earnings,  equal  to  two-thirds  the  cash  benefit  to  which  he  would 
have  been  entitled,  had  he  not  entered  the  hospital.     Should  there 
be  no  dependents,  one-fourth  of  the  cash  benefit,  as  stated,  is  paid 
to  the  patient  himself. 

(4)  A  cash  benefit  to  women  after  confinement,  for  a  period 
of  six  weeks. 

(5)  A  cash  benefit  for  widows  and  orphans. 

(6)  Benefits  for  the  families  of  members,  so  far  as  they  are 
not  self-supporting,  as  follows:   (a)  For  minor  children,  husbands, 
wives,  parents,  grandparents  and  parents-in-law,  not  themselves 
members,  if  dependent  upon  a  member,  free  medical  attendance 
and  medicines  (but  not  appliances)  for  a  maximum  period  of  13 
weeks,     (b)  A  cash  benefit  on  the  death  of  wife  or  minor  child, 
not  themselves  members,  of  from  15  to  30  marks  ($3.75  to  $7.50) 
according  to  class. 

Members  are  divided  into  10  classes,  according  to  their 
average  weekly  wages.  The  contribution  is  limited  to  3^ 
per  cent  of  the  wages,  and  the  benefit  received  varies  with 
the  class  of  the  member.  The  society  employs  23  collectors 
who  collect  contributions  from  the  employers  at  the  end  of 
each  month. 

Table  94,  on  the  following  page,  shows  the  contributions 
and  benefits  in  the  10  classes  respectively. 
'7  F  257 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 


TABLE  94. — WEEKLY      CONTRIBUTIONS,     AND     SICK     AND     FUNERAL 

BENEFITS    BY  WAGE   CLASSES.      LOCAL   SOCIETY 

OF  LEIPSIC,   1908 


WEEKLY  CONTRIBUTIONS 

Weekly  Sick 

jt 

Benefit  in 

Class 

Average 
Daily 
Wage 

Paid  by 
Em- 

Paid by 
Em- 

Total 

Addition  to 
Free  Medical 
Attendance, 
Medicines, 

Funeral 
Benefit 

ploye 

ployer 

Appliances 

(Marks) 

(Marks') 

(Marks') 

(Marks) 

(Marks) 

(Marks) 

I 
11 

5.00 

4.50 

i° 

.64 

•35 
•32 

3 

15.00 
13.50 

100 

90 

III 

4.00 

.56 

.28 

.84 

I2.OO 

80 

IV 

3.50 

.50 

•25 

•75 

IO.5O 

7° 

V 

3.00 

.42 

.21 

.63 

Q.OO           |            60 

VI 

2.50 

.36 

.18 

•54 

7.50 

50 

VII 

2.00 

.28 

•'4 

.42 

6.00 

40 

VIII 

I.50 

.22 

.1  1 

•33 

4.50 

3° 

IX 

1.  00 

.14 

.07 

.21 

3.00 

20 

X 

0.60 

.08 

.04 

.12 

i.  80 

12 

In  the  year  1908,  free  medical  attendance  and  sick  bene- 
fits were  granted  in  70,703  separate  cases  of  sickness.  The  total 
number  of  days  sick  was  1,697,796,  an  average  duration  of  24 
days  for  each  case  of  sickness.  Incapacity  resulting  from  acci- 
dent contributed  6,998  cases,  or  about  10  per  cent  of  all.  Of  the 
sicknesses,  5,708  continued  for  less  and  1,290  for  more  than  four 
weeks.  In  addition,  10,006  members  received  treatment  in  hos- 
pitals at  the  expense  of  the  society,  including  2,732  wives  and 
children  of  members.  Moreover,  3,154  women  received  aid  in 
confinement.  There  were  4,940  death  benefits  paid.  The  society 
employs  under  contract  410  physicians,  each  member  being  per- 
mitted free  choice  among  them,  unless  he  requires  attendance  at 
his  home,  when  a  physician  practicing  in  the  neighborhood  must 
be  selected.  Since  May,  1905,  medical  fees  have  been  fixed  at 
6.50  marks  ($1.63)  per  member  per  year,  divided  as  hereinafter 
set  forth;  but  when  special  fees  are  included,  the  cost  in  1908  was 
8.54  marks  ($2.14)  per  member.  The  society  also  employed  137 
specialists,  23  dentists,  55  druggists,  and  20  opticians. 

The  amount  set  aside  for  physicians'  fees  is  divided  as 
follows:  Each  physician  reports  the  number  of  calls  and  office 

258 


GERMANY 

treatments;  the  aggregate  amount  set  aside  for  payment  of 
physicians  is  then  divided  by  the  number  of  office  treatments 
plus  twice  the  number  of  calls.  This  gives  the  sum  which  can  be 
allowed  for  each  office  treatment,  twice  that  sum  being  allowed 
for  each  call.  Apportionment  is  made  by  a  board  of  physicians 
which  arbitrates  all  disputes. 

In  addition,  the  society  has  at  its  disposal  three  convales- 
cent homes,  the  most  important  of  which  is  the  health  resort  of 
Augustusbad,  near  Dresden;  it  contains  200  beds  and  is  fitted 
with  all  kinds  of  medicinal  baths,  etc.  For  the  maintenance  of 
each  patient,  2.50  marks  (63  cents)  per  diem  is  paid.  A  cash  ben- 
efit is  paid  to  the  dependent  family,  precisely  as  if  the  patient  were 
undergoing  treatment  in  a  hospital.  All  these  benefits  are  fur- 
nished members  without  additional  payments. 

Of  special  interest  is  the  society's  campaign  to  prevent 
tuberculosis  among  its  members.  Doctors  employed  by  the 
society  are  requested  to  report  the  origin,  treatment  and  prog- 
ress of  each  case  of  tuberculosis  under  their  care  and  to  notify  the 
management  of  all  cases  of  diseases  of  the  lungs  which  would 
seem  to  require  treatment  in  a  sanitarium.  Steps  are  then  taken 
to  send  the  patient  to  a  suitable  sanitarium.  Of  1,390  tubercu- 
lar members  who  made  application  during  the  course  of  the  year 
1908,  no  less  than  745  were  taken  care  of.  It  has  been  found 
that  in  a  remarkably  large  percentage  of  the  cases  either  a  com- 
plete or  at  least  a  partial  cure  has  been  effected.  The  society  also 
has  at  its  disposal  a  special  convalescent  home  in  the  woods  of 
Stotteritz,  a  suburb  of  Leipsic,  where  consumptive  members  may 
spend  the  day  in  the  summer.  To  save  those  living  at  a  distance 
from  going  home  to  their  mid-day  meal,  the  society  supplies  a  sum 
for  the  purchase  of  milk  and  luncheon.  Railway  fares  are  also 
given. 

To  check  simulation,  the  society  has  a  well-developed 
system  of  supervision  of  sick  members.  The  city  is  divided 
into  21  sub-districts,  which  are  in  charge  of  paid  inspectors 
who  are  under  the  direction  of  the  central  bureau.  Each 
of  these  has  under  him  several  unsalaried  district  visitors 
selected  from  the  members.  These  voluntary  visitors  now 
number  250. 

259 


INSURANCE   AGAINST  SICKNESS   AND   DEATH 

The  following  table  shows  the  receipts  and  disbursements 
of  this  society  for  1908. 


TABLE  95. — RECEIPTS  AND  DISBURSEMENTS  OF  THE  LOCAL  SOCIETY 
OF   LEIPSIC,   1908 


Receipts  Marks 

Interest 121,916 

Entrance  fees  from  new  voluntary  members  699 

Contributions  of  employes  and  employers  5,895,616 

Contributions  of  voluntary  members. .      .  406,965 
Indemnities   received  from  employers'  mu- 
tual  insurance  associations  for  benefits 

paid            '73.01 ' 

Other  receipts 51 ,494 

Total 6,649,701 

Disbursements  Marks 

Medical  attendance       ....  1,415,324 

Medicines  and  appliances    .       .       .  680,887 

Benefits  to  members     ....  2,672,868 

Benefits  to  families  of  members  .       .  '59.345 

Benefits  to  women  after  confinement  124,741 

Funeral  benefits 15 5.813 

To  hospitals,  sanitariums,  etc.    .       .  608,637 

Administration  expenses      .       .       .  573, 336 

Other  disbursements    .....  186,407 


Per  Cent 
1.8 
.o 

88.7 
6.1 


2.6 

.8 


Per  Cent 

21.5 

10.4 

40.6 

2.4 

J.9 

2.4 

9-3 
8-7 

2.8 


Total 6,577,378  100.0 

In  this  year  receipts  amounted  to  about  40  marks  ($10), 
and  disbursements  to  39.7  marks  ($9.92)  per  member.  The 
surplus  of  receipts  over  disbursements  is  at  the  end  of  the 
year  carried  to  the  reserve  fund,  the  law  requiring  10  per  cent 
of  each  year's  contributions  to  be  put  into  this  fund  until  it  equals 
the  average  annual  disbursements  during  the  last  three  years. 
The  Leipsic  society  now  possesses  reserves  amounting  to  almost 
6,500,000  marks  ($1,625,000). 

A  centralized  society,  similar  in  most  respects  to  the  one 
in  Leipsic,  is  found  in  Dresden.  The  chief  difference  in  this  so- 
ciety is  that  physicians  are  not  paid  per  patient  but  by  annual 
salaries.  The  entire  city  is  divided  into  100  districts,  each 
in  charge  of  a  physician  who  receives  3000  marks  ($750)  per 
annum.  This  makes  an  average  cost  of  a  little  more  than  six  marks 
($1.50)  per  member,  somewhat  less  than  that  in  the  Leipsic 

260 


GERMANY 

society.  The  physician  is  thus  made  independent  of  his  patients 
and  all  incentives  to  increase  their  number  are  removed. 

In  Berlin  no  such  consolidation  of  societies  has  as  yet  taken 
place.  At  present,  there  are  many  separate  organizations,  includ- 
ing 55  local  societies,  54  factory  societies  and  19  guild  or  trade 
societies.  In  addition,  there  are  a  few  mutual  aid  societies;  but 
the  three  first  named  classes  include  nearly  the  entire  insured 
population.  Local  societies  are  the  largest,  having  525,686  mem- 
bers at  the  close  of  1906.  That  composed  of  clerks  in  stores  had 
nearly  1 00,000  members.  Factory  societies  had  126,259  members 
and  the  guilds  or  trade  societies,  58,445,  making  a  total  for  these 
three  classes  of  710,390,  one-third  of  whom  are  women. 

The  Berlin  societies,  however,  have  developed  along  one  line 
in  which  they  are  distinctly  in  advance  of  the  others.  They  have 
formed  a  central  organization,  known  as  the  Central  Commission 
of  the  Sickness  Societies  of  Berlin,  for  the  purpose  of  instructing 
members  in  important  matters  of  hygiene  and  sanitation.  An 
interesting  program  of  instruction  has  been  developed.  Lecture 
courses,  arranged  for  various  parts  of  the  city  and  suburbs,  are 
open  to  members  without  cost.  Lectures  are  given  by  specialists 
and  include  such  subjects  as  sexual  infection  and  its  consequences; 
causes  and  prevention  of  consumption;  sickness  and  accident; 
care  of  the  throat,  nose  and  ears;  women's  diseases  and  their 
prevention;  the  perils  of  alcohol;  diet  and  digestion;  the  care 
of  the  eyes  and  other  common  disorders  which  interfere  with  the 
effectiveness  of  workingmen  and  workingwomen.  Literature  upon 
all  of  these  subjects  is  printed  in  a  simple  and  striking  form  and 
is  widely  circulated. 

The  operations  of  a  typical  voluntary  sickness  insurance 
society  remain  to  be  considered.  One  of  the  most  instructive 
is  the  "Hansa,"  in  Hamburg.  It  was  established  in  1879,  and  has 
1,265  members,  of  whom  990  are  men  and  275  women.  Some 
join  such  a  society,  it  is  said,  in  preference  to  one  of  another  class 
because  they  find  it  easier  to  obtain  employment,  the  employer 
not  being  required  to  contribute  to  a  voluntary  society.  In  this 
connection,  however,  it  should  be  noted  that  the  employer  by 
thus  attempting  to  escape  paying  a  part  of  the  cost  of  sickness 
insurance,  runs  the  risk  of  being  mulcted  for  the  costs  of  an  illness, 

261 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 

should  the  workman  have  failed  to  keep  up  his  payments.  There 
are  in  the  "Hansa"  two  classes  of  members:  first,  adult  males 
who  pay  2.30  marks  (58  cents)  monthly;  second,  women,  and 
children  under  sixteen,  who  pay  1.60  marks  (40  cents).  In  case  of 
disability  a  sick  benefit  of  two  marks  (50  cents)  daily,  exclusive  of 
Sunday,  is  paid  to  members  of  the  first  class,  and  1.25  marks 
(3 1  cents)  to  members  of  the  second.  The  benefit  is  paid  for  26 
weeks,  after  which  time  the  member  becomes  entitled  to  one  from 
the  government  invalidity  fund.  Wives  and  children  of  members 
are  also  cared  for  in  case  of  sickness.  The  society  employs  its  own 
physicians,  but  in  case  of  emergency,  the  member  may  employ 
others.  A  funeral  benefit  of  40  marks  ($10)  is  paid  upon  the 
death  of  a  member  of  the  first  class,  and  30  marks  (17.50)  upon 
the  death  of  a  member  of  the  second,  if  the  member  has  been  in 
good  standing  for  at  least  three  months,  and  double  these  amounts 
if  in  good  standing  six  months  or  over. 

The  officers,  consisting  of  president,  vice-president  and 
secretary  are  elected  by  the  members.  The  treasurer,  who  con- 
ducts the  ordinary  business  of  the  society,  alone  receives  a  salary 
and  is  under  bond.  Cost  of  administration  for  the  year  1907, 
largely  for  commissions  on  collection  of  dues,  was  approximately 
5000  marks  ($1250).  As  in  many  voluntary  societies,  the 
receipts  for  the  past  year  were  less  than  the  disbursements.  It 
will,  therefore,  be  necessary  to  increase  the  dues  in  order  to  meet 
the  legal  requirements.  Malingering  is  prevented  by  forcing  the 
invalid,  concerning  whose  sickness  there  is  doubt,  to  submit  to 
hospital  treatment,  instead  of  remaining  at  home.  This  method 
is  said  to  be  effectual. 


AUSTRIA 

Before  the  institution  of  the  compulsory  system  in  Austria, 
sickness  insurance  was  conducted  by  many  mutual  societies,  guild 
sickness  associations  and  miners'  associations.  These  had  sprung 
up  under  the  influence  of  favorable  legislation  and  had  paved  the 
way  for  the  compulsory  system. 

The  first  law  having  an  important  bearing  upon  later 
legislation  was  that  of  February  18,  1837,  which  provided  that  all 

262 


AUSTRIA 

trade  employers  should  give  free  medical  attendance,  for  a  period 
of  four  weeks,  to  workmen  and  apprentices,  without  distinction  of 
sex.  The  law  of  May  23,  1854,  created  sickness  insurance  societies 
for  miners  (Bruderladen), modeled  after  the"  Knappschaftskassen" 
of  Germany.  No  attempt  was  made  to  put  them  on  a  technically 
solvent  basis.  Workingmen  were  not  represented  in  their  man- 
agement, and  in  many  cases  the  legality  of  their  operations  was 
far  from  certain. 

Of  greater  importance  than  the  earlier  enactments,  was  the 
Trade  Ordinance  of  December  20,  1859,  which  created  factory 
and  guild  sickness  insurance  societies.  This  measure  really  in- 
augurated the  modern  principle  of  insurance  as  a  factor  in  labor 
legislation.  It  provided  that  employers  in  establishments  em- 
ploying more  than  20  workingmen  should  organize  sickness  and 
accident  benefit  societies,  especially  if  the  trade  was  of  a  dangerous 
character.  If  a  society  was  already  in  existence,  the  employer 
was  required  to  contribute  to  its  support.  Payments  of  employers 
were  half  as  much  as  the  aggregate  contributions  of  their  employes 
which  at  most  was  3  per  cent  of  their  wages.  Practical  results 
were  far  from  satisfactory.  Controversies  constantly  arose  be- 
cause the  laws  drew  no  distinction  between  incapacity  due  to  sick- 
ness and  that  due  to  accident.  Sometimes,  too,  it  was  impossible 
to  determine  when  the  employer  should  create  a  new  society  or 
support  an  existing  one.  Employers'  contributions  were  not 
sufficiently  definite  and  the  disinclination  of  many  workingmen 
to  join  the  societies  discouraged  their  development.  The  power 
of  the  state,  moreover,  was  not  strong  enough  to  enforce  the  law, 
and  a  large  majority  of  workingmen  remained  without  protection. 

Meanwhile,  the  law  of  1852  "recognizing"  and  regulating 
sickness  insurance  societies  had  been  passed.  Greater  privileges 
were  later  granted  by  the  law  of  November  15,  1867,  which  "rec- 
ognized" them  as  benevolent  organizations.  Further  progress  in 
this  direction  was  checked,  however,  by  the  passage  of  the  insur- 
ance law  of  1880  which  put  them  back  in  the  same  legal  status 
in  which  the  law  of  1852  had  placed  them. 

Under  the  above  regulations,  there  were  in  1879,  860  volun- 
tary organizations,  including  40  railroad  societies.  Of  these  504 
were  connected  with  industrial  enterprises,  235  with  trades,  25 

263 


INSURANCE    AGAINST   SICKNESS    AND   DEATH 

with  various  other  undertakings  and  93  were  general  funds  not 
connected  with  any  particular  branch  of  labor.  Funds  for 
these  societies  were  contributed  by  employers  in  22  cases  only, 
by  workingmen  in  320  cases  and  by  both  in  518  cases.  There 
were  in  all  316  trade  guilds,  of  which  52  gave  benefits  in  case 
of  sickness  and  18  benefits  to  widows  and  orphans.  Only  348 
in  all  granted  medical  attendance,  medicines  and  cash  bene- 
fits, and  only  120  funeral  benefits.  The  number  of  members  in 
748  societies  was  306,678.  The  income  for  1879  was  2,013,018 
florins  ($805,207)  and  the  expenditures  were  1,854,911  florins 
($741,964). 

The  inadequacy  of  the  above  provisions  was  apparent  to 
everyone,  especially  in  view  of  the  rapid  development  of  industry 
in  Austria.  The  authorities,  therefore,  attempted  to  improve 
conditions  by  increasing  the  liability  of  employers  and  by  estab- 
lishing on  a  compulsory  basis  the  already  existing  sickness  insur- 
ance societies  of  the  guilds,  as  well  as  those  of  the  miners.  After 
many  efforts,  two  amendments  to  the  trade  ordinance,  those  of 
March  15,  1883,  and  March  8,  1885,  were  passed.  Of  these,  the 
first  declared  the  sickness  insurance  organizations  of  the  trade 
guilds  compulsory  institutions  and  attempted  to  regulate  them. 
The  second  provided  that  employers  in  factories  where  there  were 
no  compulsory  trade  guilds,  should  establish  special  factory  soci- 
eties. Again  very  few  employers  complied  with  the  law.  At  the 
close  of  1887,  only  200  sickness  insurance  societies  were  in  ex- 
istence though  there  were  about  4500  guilds,  proof  most  positive 
of  the  futility  of  the  ordinance  of  1883.  Meanwhile,  agitation  in 
Germany  and  the  actual  enactment  of  the  German  laws  impressed 
everybody  with  the  necessity  of  establishing  a  system  of  obligatory 
insurance  upon  the  German  model.  Opposition  was  no  longer 
directed  against  the  principle  of  compulsion,  the  important  prob- 
lem being  how  to  establish  a  system  which  would  not  overtax  the 
limited  finances  of  small  employers.  In  this  spirit  the  original 
sickness  insurance  bill  was  introduced  in  Parliament  in  1885, 
received  its  various  modifications,  and  became  a  law  March  30, 
1888.  Modified  later  by  the  amendment  of  April  4,  1889,  it  pro- 
vides for  the  insurance  of  workingmen  and  workingwomen,  as  well 
as  for  employes  in  all  branches  of  industry,  trade  and  transporta- 

264 


AUSTRIA 

tion.  Those  engaged  in  navigation,  forestry,  agriculture,  and 
home  industries,  as  well  as  those  employed  by  the  state  or  com- 
munes, may  insure  voluntarily. 

As  in  Germany,  the  government  turned  to  the  already  ex- 
isting agencies  for  the  administration  of  the  law.  It  was  found 
necessary,  however,  to  supplement  these  with  a  number  of  new 
societies.  The  following  six  types  of  societies  began  operations: 

(1)  District   sickness   insurance  societies   (Bezirkskranken- 
kassen)  which,  like  the  local  and  communal  sickness  societies  of 
Germany,  correspond  to  geographical  districts.     All  workingmen, 
not  elsewhere  insured,  must  join  these. 

(2)  Factory  sickness  insurance  societies   (Fabrikskranken- 
kassen)  organized  by  owners  of  large  factories,  not  connected 
with  trade  guilds,  which  employ  at  least  100  hands. 

(3)  Building  trades  sickness  insurance  societies  (Baukrank- 
enkassen)  established  by  builders,  and  usually  of  a  temporary 
character. 

(4)  Trade-guild     sickness    insurance   societies    (Genossen- 
schaftskrankenkassen),  corresponding  to  the  "Innungskranken- 
kassen"  of  the  German  system. 

(5)  Private  friendly  societies  (Vereine). 

(6)  Miners'  societies  (Bruderladen). 

The  law  of  July  16,  1892,  added  a  seventh  category;  namely, 
registered  mutual  sickness  insurance  societies  (Eingeschriebene 
Hilfskassen)  comprised  chiefly  of  salaried  employes.  In  practice, 
there  is  also  an  eighth  class,  societies  composed  of  apprentices 
(Lehrlingskrankenkassen).  These  latter  are  offshoots  of  and  as- 
sociated with  the  trade-guild  sickness  insurance  societies. 

District,  building  trades  and  factory  societies  are  distinctly 
new  creations  of  the  compulsory  law.  Trade-guild  societies, 
private  friendly  societies  and  miners'  societies,  on  the  other 
hand,  were  permitted  to  carry  on  their  operations  under  their  own 
previous  legislation,  provided  they  granted  the  minimum  benefits 
of  the  new  law.  These  are  (i)  free  medical  attendance  and  medi- 
cines, or  hospital  treatment  if  necessary;  (2)  a  sick  benefit  of 
60  per  cent  of  the  wages  for  each  sickness  of  more  than  three 
days,  beginning  from  the  first  day  and  not  to  exceed  20  weeks; 
(3)  the  same  benefit  to  women  for  four  weeks  after  childbirth, 

265 


INSURANCE    AGAINST   SICKNESS   AND   DEATH 

and  (4)  in  case  of  death,  a  funeral  benefit  equal  to  20  times  the 
daily  wages.  These  are  minimum  benefits.  Societies  created  by 
the  law  may,  however,  grant  free  medical  attendance  and  medi- 
cines, a  sick  benefit  up  to  three-quarters  of  the  daily  wages,  pay- 
able for  a  period  up  to  one  year,  and  a  death  benefit  up  to  100 
kronen  ($20).  Other  societies  may  also  pay  more  than  the  mini- 
mum; but,  as  the  state  limits  the  contributions  of  the  members  to 
3  per  cent  of  their  wages,  they  cannot  go  very  much  above.  In 
determining  the  amount  of  benefit,  four  kronen  (80  cents)  is  con- 
sidered the  maximum  daily  wage. 

In  all  organizations  except  in  the  private  friendly  and 
miners'  societies,  contributions  of  workingmen  and  employers 
amount,  as  in  Germany,  to  two-thirds  and  one-third  respectively. 
To  the  former,  employers  need  not  contribute  at  all;  to  the  latter, 
only  as  required  by  a  separate  statute.  In  practice,  they  often  do 
more  than  required  by  law  for  the  sake  of  peace  and  good  will, 
sometimes  paying  one-third  of  the  total  contributions  to  private 
friendly  societies  and  more  than  the  legal  proportion  to  other 
organizations. 

TABLE   96. — NUMBER  OF   SICKNESS    INSURANCE    SOCIETIES, 
DECEMBER  31,    1890-1906 


TRADE-GUILD 

Year 

District 

Factory 

Building 
Trades 

Private 
Friendly 

Total 

Journey- 

Appren- 

men 

tices 

1890 

549 

,446 

4 

673 

94 

59 

2,825 

1895 

56, 

,388 

4 

841 

306 

"3 

3,213 

1900 

565 

.33' 

2 

878 

376 

'47 

3-299 

1902 

562 

,291 

6 

874 

393 

164 

3,290 

1904 

570 

,291 

32 

894 

421 

.89 

3-397 

1905 

57' 

,279 

35 

884 

420 

.98 

3,387 

1906 

57' 

,258 

3' 

880 

433 

205 

3.378 

As  in  Germany,  it  is  obligatory  upon  the  employer  to  en- 
force the  payments  of  workingmen.  If  a  newly  engaged  employe 
does  not  already  belong  to  some  society,  the  employer  must 
report  his  name  to  the  authorities  not  later  than  three  days  after 

266 


AUSTRIA 

work  is  begun.  For  each  neglect  to  do  this,  he  may  be  compelled 
to  pay  a  fine  of  about  $5.00  or  to  suffer  imprisonment  for  two 
days.  A  court  of  arbitration  decides  disputes  without  cost  to  the 
appellant.  As  has  been  already  intimated,  the  system  of  sickness 
insurance  is  far  less  developed  in  Austria  than  in  Germany.  This 
is  immediately  apparent  from  the  comparatively  small  number 
of  societies  of  the  various  types,  as  shown  in  Table  96. 

Excluding  the  trade-guild  societies  of  apprentices  which 
receive  special  statistical  treatment  in  the  Austrian  reports,  the 
number  of  societies  of  the  remaining  five  types  was  2945  in  1906. 
Of  these  only  2917  reported  in  detail  to  the  government  and  they 
alone  are  considered  in  the  following  figures.  Table  97  shows 
the  growth  in  membership  in  the  five  chief  classes  of  societies. 


TABLE    97. — NUMBER   AND    AVERAGE    MEMBERSHIP  OF    SICKNESS 

INSURANCE    SOCIETIES,    1890-1906 
Year  Number  of  Societies       Average  Membership 

1890 2,740  1,548,825 

1895 2'9'5  2,066,435 

IQOO 2,942  2,499,930 

1902 2,915  2,595,474 

1904 2,942  2,767,506 

1905 2,934  2,844,245 

1900 2,917  2,946,668 


Of  the  2,946,668  insured  in  1906,  667,273,  or  22.6  per  cent, 
were  women.  Table  98  shows  the  percentage  of  the  sexes  in 
each  type  of  society. 

TABLE     98. — PER    CENT    OF    SEXES    IN    SICKNESS    INSURANCE 
SOCIETIES,    1906 

.    .  Per  Cent 

Societies  ^en  Women 

District      .        .  80.8  19.2 


Factory     . 
Building    . 
Trade-guild 
Private  Friendly 
All  societies 


73.7  26.3 

96.1  3.9 

78.2  21.8 
73.0  27.0 

77.4  22.6 


Austrian  sickness  societies  are  usually  small  organizations. 
Table  99  gives  the  average  number  of  members  in  1906. 

267 


INSURANCE    AGAINST   SICKNESS    AND    DEATH 


TABLE  99. — AVERAGE  NUMBER  AND  PER  CENT  OF  SICKNESS  INSUR- 
ANCE  SOCIETIES    AND   OF   MEMBERSHIP,    1906 


Societies 

Average 
Number 
of 
Societies 

Per  Cent 
of  Total 

Average 
Membership 

Per  Cent 
of  Total 

Average 
Membership 
per  Society 

District      . 
Factory     . 
Building  Trade 
Trade-guild 
Private  Friendly 

*l 
1,246 

«24 
871 

194 

19.5 
43.0 

30.0 
6.7 

1,271,142 

707.3  '4 
8,349 
428,998 
530,865 

43.1 

24.0 
0.3 
14.6 
18.0 

2,250 
568 

348 

493 
2,736 

Total  . 

2,900 

IOO.O 

2,946,668 

IOO.O 

1,016 

In  spite  of  their  small  number  (19.5  per  cent),  the  district 
societies  contain  a  little  over  43  per  cent  of  the  total  number  in- 
sured; half  of  them  have  more  than  1000  members  each.  The 
greatest  interest  of  the  government,  therefore,  is  centered  in  their 
operation  and  it  may  be  said  that  the  law  is  being  worked  out 
largely  through  their  agency.  They  are  permitted  to  organize 
central  federations,  covering  an  entire  district.  Contiguous  dis- 
trict societies  may  in  this  way  establish  a  common  reserve  fund, 
co-operate  in  the  investment  of  their  funds,  organize  a  common 
statistical  service  and  make  common  contracts  with  physicians, 
druggists  or  hospitals.  Because  of  these  and  other  privileges, 
district  societies  are  the  most  prosperous  and  are  likely  to  become 
the  principal  organs  of  administration  in  the  projected  reform 
law.* 

Factory  societies,  although  most  numerous,  are  generally 
small  organizations  of  workingmen  under  the  same  employer. 
They  include  associations  of  public  and  private  railway  employes, 
as  well  as  employes  of  the  state  manufacturing  establishments. 
This  type  of  society,  as  Table  96  shows,  is  gradually  becoming 
less  popular,  the  general  tendency  toward  centralization  making 
it  probable  that  these  as  well  as  the  building  trades  and  trade- 
guild  societies  will  become  less  and  less  important  factors  in  sick- 
ness insurance. 

*  For  a  description  of  the  proposed  measures,  see  Chapter  XIX,  The  Re- 
form Project  in  Austria,  page  414. 

268 


AUSTRIA 

Private  friendly  societies  are  still,  on  the  average,  larger 
in  membership  than  district  societies,  a  fact  that  may  be  ascribed 
to  the  long  period  of  their  operation  and  to  their  social  character. 
Altogether,  they  are  in  a  far  more  flourishing  condition  than 
similar  organizations  in  Germany;  and  in  the  larger  cities, 
especially  Vienna,  they  have  associated  themselves  with  the 
trade-guilds  and  many  of  them  have  federated.  They  thus 
provide  in  common  for  medical  attendance,  medicines,  investiga- 
tion of  claims  and  similar  matters,  but  maintain  their  individual 
autonomy,  receiving  premiums  and  making  disbursements. 
Federations  are  most  effectual  for  all  the  purposes  for  which  they 
were  created,  and  especially  for  prevention.  This  they  ac- 
complish by  educating  workmen  to  the  dangers  of  accident  and 
disease,  and  by  interfering  directly  when  certain  shops  are  found 
to  produce  an  undue  percentage  of  disability.  Although  there  is 
as  yet  no  uniformity  of  opinion  on  this  matter,  the  general  tend- 
ency seems  to  be  toward  establishing  large  territorial  organiza- 
tions which  shall  replace  the  existing  smaller  societies  through- 
out the  empire. 

The  Austrian  sickness  and  mortality  statistics  are  especially 
instructive.  Table  100  gives  the  figures  in  most  general  form. 


TABLE      IOO. — TOTAL   NUMBER    OF    CASES   AND    DAYS    OF     SICKNESS 
AND    DEATHS    IN    SICKNESS    INSURANCE    SOCIETIES,    1890-1906 


TOTAL   SICKNESS 

CONFINEMENT  ALONE 

Year 

Deaths 

Cases 

Days 

Cases 

Days 

1890 

797,683 

12,409,327 

26,780 

689,889 

15.925 

.895 

,013,599 

17,516,981 

4  1  ,846 

,124,522 

20,094 

1900 

,3  13,  '48 

22,708,651          51,053 

,399-474 

23,845 

1902 

,287,575 

23,301,237 

52,113 

,430.103 

23,504 

1904 
1905 

,412,272 
,527.657 

25,088,706 
26,978,07  1 

*'fl 
50,696 

,468,514 
,434,982 

24,825 
27,080 

1906 

,492,360 

26,433,187          54,020 

,502,120 

24,858 

More  important  are  the  figures  in  terms  of  the  number 
insured.     Table  101  gives  these  data  under  four  principal  heads. 

269 


INSURANCE   AGAINST   SICKNESS   AND    DEATH 


TABLE     IOI. — CASES    AND    DAYS    OF     SICKNESS     AND     DEATH     RATE 
IN    SICKNESS    INSURANCE     SOCIETIES,     1890-1906 


1890 

1895 

1900 

1902 

1904 

1905 

1906 

Cases  of  sickness  per  year 

per  100  insured 

49.8 

47.0 

50.5 

47.6 

49.1 

51.9 

48.8 

Average  days  of  sickness 

per  case    . 

15.2 

16.9 

16.9 

17.7 

'74 

'7-3 

'7-3 

Days  of  sickness  per  year 

per  100  insured 

80  1 

848 

908 

898 

907 

949 

897 

Deaths  per  100  insured 

1.03 

0.97 

0.95 

0.91 

0.90 

0.95 

0.84 

Comparing  these  figures  with  those  of  Germany  (Table  70, 
page  240)  it  will  be  seen  that  Austria  presents  a  higher  sickness 
rate  than  Germany.  In  1906,  for  example,  the  number  of  cases 
of  sickness  per  100  insured  in  Austria  exceeded  that  in  Germany 
by  eleven.  This  condition  has  persisted  during  the  last  ten  years 
and  points  to  a  fundamental  difference  in  the  efficiency  of  the 
control  and  supervision  of  the  two  systems.  The  average  dura- 
tion of  sickness,  on  the  other  hand,  appears  to  be  lower  in  Austria 
than  in  Germany. 

Conclusive  evidence  of  greater  morbidity  in  Austria  is 
shown  by  the  third  item,  the  days  of  sickness  per  100  insured. 
Up  to  1905  the  number  of  days  of  sickness  increased  steadily 
and  in  that  year  reached  949  days  per  100  insured.  In 
1906,  the  number  fell  to  897  days.  In  Germany,  on  the  other 
hand,  in  spite  of  even  more  rapid  increase  during  recent  years, 
the  number  in  1906  reached  only  748  days  of  sickness  per  100 
insured.  Although  the  Austrian  system  pays  benefits  for  both 
Sundays  and  holidays  and  has  not,  as  in  Germany,  a  waiting 
period  of  three  days,  its  greater  liberality  cannot  account  for  this 
larger  morbidity.  The  mortality  rate  is  also  lower  in  Germany. 
Comparing  the  figures  for  1906  in  the  two  countries,  the  mortality 
rate  of  Germany  is  eight  lower  for  each  10,000  insured.  As  might 
be  expected,  considerable  differences  appear  when  the  mortality 
and  morbidity  statistics  of  the  various  societies  are  compared. 
Table  102  gives  these  figures  for  the  year  1906. 

Factory  societies  it  will  be  observed  disclose  the  most  un- 
satisfactory conditions,  with  66  cases  of  sickness  per  100  insured 

270 


AUSTRIA 


in  the  course  of  the  year.  District  and  trade-guild  societies  show 
the  lowest  figures.  The  amount  of  sickness  is  about  the  same 
for  one  sex  as  for  the  other. 


TABLE    IO2. — CASES   AND    DAYS   OF  SICKNESS   AND  DEATH-RATE    IN 
SICKNESS  INSURANCE  SOCIETIES,   1906 


District 

Factory 

Building 
Trades 

Trade- 
Guild 

Private 
Friendly 

All 
Societies 

Cases  of  sickness  per  100 

insured 

44.6 

66.2 

67.2 

35-8 

45-9 

48.8 

Cases   of   confinement  per 

100  women  insured 

8.ii 

9.65 

2.77 

5.03 

8.06 

8.10 

Days  of  sickness  per  male 

member 

7.14 

12.32 

9-44 

6.91 

8.57 

8.54 

Days  of  sickness  per  female 

member 

Including  confinements 

9.67 

13.03 

4-55 

7-31 

10.45 

10.44 

Excluding  confinements 

7.38 

10.28 

3.8. 

5-95 

8.34 

8.19 

Confinements  alone 

2.29 

2-75 

0.74 

1.36 

2.1  I 

2.25 

Days  of  sickness  per  mem- 

ber in  general,  including 

confinements 

7.63 

12.50 

9.25 

7.00 

9.08 

8-97 

Average  days  of  sickness 

per  case 

16.1 

17.8 

'37 

.8.7 

I8.5 

'7-3 

Daily  average  of  sick  per 

100  insured  . 

2.09 

3-43 

2.53 

1.92 

2.49 

2.46 

Deaths  per  100  insured  . 

0.74 

0.87 

0.55 

0.80 

I.O9 

0.84 

TABLE    103. — TOTAL  BENEFITS  AND  OTHER  EXPENDITURES   OF   SICK- 
NESS  INSURANCE   SOCIETIES,    IQ/)6 


District 
(Kronen) 

Factory 
(Kronen) 

Building 
Trades 
(Kronen) 

Trade- 
Guild 
(Kronen) 

Private 
Friendly 
(Kronen) 

Total 
(Kronen) 

Sick  benefits 

10,150,420 

8,739,049 

86,774 

4,454,845 

6,354,718 

29,785,806 

Medical  assistance 

3,820,394    2,467,932     52,294    1,340,684 

1,709,302 

9,390,606 

Medicines 

2,526,861;  2,329,162 

22,997 

975,626 

1,093,023 

6,947,669 

Hospital  service 

1,819,307;      719,498 

66,873 

737.837 

574,308 

3,917,823 

Funeral    expenses 

and  benefits     . 

414,456 

355.'75 

3,166 

215.347 

336,299 

1,324,443 

Total  benefits 

18,731,438 

14,610,816 

232,104  7,724,339 

10,067,650 

51,366,347 

Management     ex- 

penses 

2,764.377 

76,  1  26 

7.908 

M53.970 

1,169,218 

5.I7I.599 

Other       expendi- 

tures 

796,380 

1,805,549 

8,740 

209,909 

167,105 

2,987,683 

271 


INSURANCE   AGAINST   SICKNESS   AND   DEATH 

We  may  now  compare  benefits  granted.  Tables  103  and 
104  give  statistics  of  benefits  under  various  items  in  five  classes 
of  societies. 


TABLE     104. — RATIO     OF     VARIOUS      ITEMS     OF     EXPENDITURE     TO 
TOTAL,   AND    AMOUNT   EXPENDED    PER  MEMBER   IN    SICK- 
NESS  INSURANCE   SOCIETIES,   1906 


District 

Factory 

Building 
Trades 

Trade- 
Guild 

Private 
Friendly 

All 
Societies 

PER  CENT  OF  TOTAL  EX- 

PENDITURES: 

Sick  benefits 

45-5 

53.0 

34-9 

49.0 

55-7 

50.0 

Medical  assistance 

17.1 

15.0 

2I.O 

14.8 

15.0 

.5-8 

Medicines 

11.3 

14.1 

9-2 

10.7 

9-6 

11.7 

Cost  of  hospital  service 

8.2 

4-4 

26.9 

8.1 

5.0 

6.6 

Funeral    expenses     and 

benefits 

1.9 

2.1 

'•3 

2-4 

3.0 

2.2 

Total  benefits 

84.0 

88.6 

93-3 

85.0 

88.3 

86.3 

Management  expenses 

12.4 

0.5 

3-2 

12.7 

10.2 

8.7 

Other  expenditures     . 

3-6 

10.9 

3-5 

2-3 

••5 

5-0 

PER      CENT       OF       TOTAL 

INCOME: 

Sick  benefits 

45-4 

55.6 

39-4 

47.6 

52.6 

49-9 

Medical  assistance 

17.1 

'5-7 

23.7 

14.4 

14.1 

'5-7 

Medicines    . 

11.3 

14.8 

10.4 

10.4 

9-o 

1  1.6 

Cost  of  hospital  service 

8.1 

4.6 

30.4 

7-9 

4.8 

6.6 

Funeral    expenses     and 

benefits 

1.8 

2-3 

'•4 

2-3 

2.8 

2.2 

Total  benefits 

83.7 

93.0 

105.3 

82.6 

83.3 

86.0 

Management   expenses 

12.4 

0.5 

3.6 

12.3 

9-7 

8.7 

Other  expenditures     . 

3-6 

11.5 

4.0 

2.2 

i-4 

5.0 

EXPENDITURES    PER  I  N  - 

SURED: 

Kronen 

Kronen 

Kronen 

Kronen 

Kronen 

Kronen 

Sick  benefits 

7-98 

12.36 

10.39 

10.38 

11.97 

IO.I  I 

Medical  assistance 

3.01 

3-49 

6.26 

3-'3 

3.22 

3.18 

Medicines 

1-99 

3.29 

2.76 

2.27 

2.06 

2.36 

Cost  of  hospital  service 

1.43 

1.02 

8.01 

1.72 

i.  08 

••33 

Funeral     expenses     and 

benefits 

0.33 

0.50 

0.38 

0,50 

0.63 

0.45 

Total  benefits 

14.74 

20.66 

27.80 

18.00 

18.96 

'7-43 

Management   expenses 

2.17 

O.I  I 

0.95 

2.69 

2.2O 

1.76 

Other  expenditures     . 

0.63 

2.55 

1.04 

o.49 

0.32 

I.OI 

If  in  the  above  figures  we  consider  the  various  kinds  of 
benefits  alone,  we  obtain  the  following  ratios  to  total  benefits  in 
1906. 

272 


AUSTRIA 


TABLE    105. — RATIO  OF   VARIOUS    BENEFITS  TO  TOTAL  BENEFITS    IN 

SICKNESS    INSURANCE    SOCIETIES,    1906 
Societies  Per  Cent 

Sick  benefits 58.0 

Medical  assistance 18.3 

Medicines '.13.5 

Hospital  treatment 7.6 

Funeral  benefits  2.6 


Total 


IOO.O 


Turning  to  Table  82  (page  248),  of  our  study  of  sickness  in- 
surance in  Germany,  we  may  compare  benefits  under  the  two 
systems.  In  the  main  there  is  agreement.  The  most  important 
difference  in  1906  is  in  the  proportion  of  sick  benefits,  the  Austrian 
being  5.0  per  cent  of  all,  to  the  German  44.3  per  cent.  This  is 
in  line  with  the  general  tendency  to  grant  higher  cash  benefits  in 
Austria. 

Especially  instructive  are  the  figures  for  daily  benefits  and 
for  each  case  of  sickness.  Table  106  gives  the  figures  for  each 
class  of  society. 

TABLE   1 06. — AVERAGE  BENEFITS  PER  DAY,  PER  CASE  OF   SICKNESS, 
AND  PER  DEATH  IN  SICKNESS  INSURANCE  SOCIETIES,   1906 


District 

(Kronen} 

Factory 
(Kronen) 

Building 
Trades 
(Kronen) 

Trade- 
Guild 
(Kronen) 

Private 
Friendly 
(Kronen) 

All  Soci- 
eties 
(Kronen) 

PER  SICK  DAY: 
Sick  benefit 
Medical  treatment  . 
Medicines. 
Hospital  service 
Total     . 

PER  CASE  OF  SICKNESS: 
Sick  benefit 
Medical  treatment  . 
Medicines. 
Hospital  service 
Total     . 
PER  DEATH 

1.05 

>32 

.26 

.19 

•99 

.28 
.26 

.08 

1.  12 

.68 
.30 
.87 

1.48 

•45 
•32 
•25 

1.32 
•35 
•23 

.12 

1.13 

2 

•>5 

I.SQ 

1.61 

2.97 

2.50 

2.02 

1.89 

17.30 
6.5i 
4.31 
3.10 

17.97 
5.07 
479 
1.48 

'5-44 
9.30 
4.09 
1  1.90 

28.13 
8.46 
6.16 
4.66 

24.91 
6.70 
4.28 
2.25 

19.96 
6.29 
4.66 
2.62 

31.22 

29-3' 

40.73 

47.41 

38.14 

33-53 

43.88 

5776 

68.83 

62.99 

jS.OO 

53.28 

We  may  now  compare  the  average  benefits  received  by  each 
insured  member  with  the  average  cost  per  member.  Table  107 
gives  the  figures  for  1906. 

18 F  273 


INSURANCE   AGAINST  SICKNESS   AND   DEATH 

TABLE    107. — AVERAGE  CONTRIBUTION  AND  AVERAGE  BENEFIT  PER 
MEMBER    IN    SICKNESS   INSURANCE    SOCIETIES,    1906 


District 
(Kronen) 

Factory 
(Kronen) 

Building 
Trades 
(Kronen) 

Trade- 
Guild 

(Kronen) 

Private 
Friendly 
(Kronen) 

All  Soci- 
eties 
(Kronen) 

Average     contribution 

per  member    . 

11.74 

14.17 

16.92 

14.56 

'7-93 

13.86 

Average  contribution  of 

employer  per  member 

5.86 

8.05 

9.48 

7-25 

4.83 

6.42 

Combined  average  con- 

tribution    of    mem- 

bers and   employers 

per  member    . 

17.60 

22.22 

26.40 

21.81 

22.76 

20.28 

Total  income  per  mem- 

ber . 

18.74 

24.47 

29.68 

23.06 

23-75 

21.68 

Average     benefit     per 

member  . 

"4-74 

20.66 

27.80 

18.00 

18.96 

•7-43 

Average  excess  of  bene- 

fit over  contribution 

per  member 

3.00 

6.49        10.88 

3-44 

1.03 

3-57 

It  is  at  once  clear  that  in  each  variety  of  society,  benefits 
exceed  the  cost  to  members,  and  in  some  cases,  as  in  building 
trade  and  factory  societies,  the  excess  is  considerable.  This  con- 
dition is  of  course  made  possible  only  by  the  additional  contri- 

TABLE     IO8. — INCOME    AND    DISBURSEMENTS    OF    SICKNESS    INSUR- 
ANCE  SOCIETIES,    1906 


District 

(Kronen) 

Factory 
(Kronen) 

Building 
Trades 
(Kronen) 

Trade- 
Guild 
(Kronen) 

Private 
Friendly 
(Kronen) 

Total 
(Kronen) 

INCOME: 

Total  . 

23,824,532 

17,309,826 

247.775 

9,894.378 

12,608,945 

63,885,456 

From  contribu- 

tions    . 

22,369,822 

15,716,863 

220,407 

9-354.868 

12,083,846 

59,745,806 

DISBURSEMENTS: 

Total  . 

22,292,195 

16,492,491 

248,752 

9,088,218 

11,403,973 

59,525,629 

For  benefits    . 

18,731,438  14,610,816 

232,104 

7.724.339 

10,067,650  51,366,347 

EXCESS   OF    IN- 

COME  OVER 

DISBURSE- 

MENTS: 

Total. 

'•532.337 

817.335 

977 

806,160 

1,204,972 

4.359.827 

Per  cent  of  con- 

tributions   . 

6.85 

5.20 

8.62 

9-97 

7.30 

274 


AUSTRIA 

bution  of  employers.    Table  108  gives  the  figures  for  total   in- 
come and  disbursements  of  the  societies. 

With  the  exception  of  the  building  trade  societies,  there  is 
a  surplus  for  each  type.  It  must  not  be  supposed,  however, 
that  all  the  societies  of  the  four  types  which,  as  a  whole, 
showed  a  surplus  for  1906,  are  in  such  a  favorable  financial  condi- 
tion. This  is  true  only  of  the  average.  A  considerable  number 
show  deficits  as  Table  109  indicates. 


TABLE      109. — FINANCIAL     CONDITION     OF     SICKNESS      INSURANCE 

SOCIETIES,    1906 


District 

Factory 

Build- 
ing 
Trades 

Trade 
Guilds 

Private 
Friendly 

All  Soci- 
eties 

Number  of  societies 

With  a  surplus  . 

453 

772 

'4 

623 

,63 

2,025 

(With     20     per 

cent  of  contribu- 

tions to  reserve 

fund) 

(74) 

(280) 

(8) 

(227) 

(59) 

(648) 

With  a  deficit     . 

114 

476 

16 

252 

34 

892 

Total    . 

567 

1,248 

30 

875 

197 

2,917 

Total    surplus  (Kro- 

nen) 
Total  deficit  (Kronen) 

i  ,698,926 
166,589 

1,238,897 
421,562 

36,108 
37.o85 

950,526 
144,366 

1,238,576 
33,064 

5,163,033 
803,206 

Societies  with  a  re- 

serve fund  . 

540 

1,220 

'7 

850 

192 

2,819 

Societies  without     a 

reserve  fund 

27 

28 

13 

25 

5 

98 

Total    reserve    fund 

(Kronen) 

13.253.845 

21,291,831 

43.879 

8,908,350 

8,766,532 

52,264,437 

Total  uncovered  lia- 

bilities (Kronen) 

65,804 

141,572 

57.823 

58,135 

i,  168 

324,502 

Net  reserve  fund  at 

end  of  fiscal  year 

13,188,041 

21,150,259 

-'3.944 

8,850,215 

8,765,364 

51.939.935 

Amount    of    reserve 

fund  per   member 

at  end  of  fiscal  year 

10.37 

29.90 

-,.67 

20.63 

16.51 

17.63 

The  number  of  societies  with  a  deficit  for  1906  was,  therefore, 
over  31  per  cent.  Of  the  2917  societies,  98,  or  3  per  cent,  had 
absolutely  no  reserve  fund.  Table  1 10  shows  the  conditions 
prevailing  in  each  class  of  society. 


275 


INSURANCE   AGAINST  SICKNESS   AND   DEATH 


TABLE      IIO. — FINANCIAL     CONDITION      OF     SICKNESS      INSURANCE 
SOCIETIES,   IN    PERCENTAGES,    1906 


Dis- 

Fac- 

Building 

Trade- 

Private 

All  So- 

trict 

tory 

Trades 

Guild 

Friendly 

cieties 

Percent  of  Societies  having: 

Surplus  .... 

So 

62 

47 

7' 

83 

69 

Deficit     .... 

20 

38 

53 

29 

'7 

3' 

Reserve  fund 

95 

98 

57 

97 

97 

97 

Without  reserve  fund   . 

5 

2 

43 

3 

3 

3 

Ratio  of  deficit  to  surplus 

9.81 

34.03 

102.71 

15.19 

271 

15.56 

Ratio  of  uncovered  liabilities 

to  reserve  fund 

0.50 

0.66 

'3  '78 

0.65 

O.OI 

0.62 

District  societies  are  required  by  law  to  set  aside  at  least 
20  per  cent  of  their  contributions  each  year  as  a  reserve  fund. 
Of  this  amount,  a  part  is  placed  in  the  general  reserve  fund  of  the 
federation  of  district  societies  to  which  the  society  belongs.  The 
remainder  must  be  accumulated  until  it  amounts  to  double  the 
aggregate  annual  disbursements.  Judged  by  this  standard,  the 
number  of  societies  in  a  satisfactory  financial  condition  is  small. 
In  1906,  only  22^  per  cent  of  all  were  able  to  set  aside  20  per 
cent  of  their  current  contributions  for  reserve.  The  number,  on 
the  other  hand,  which  at  the  beginning  of  the  year  had  a  re- 
serve amounting  to  double  the  average  annual  disbursements, 
was  larger,  reaching  over  39  per  cent  of  the  total.  Of  these, 
56  were  district,  719  were  factory  and  319  trade-guild  societies. 

Appeals  by  members  from  the  decision  of  the  authorities 
of  the  societies  are  decided  according  to  law  by  the  courts  of 
arbitration  attached  to  the  several  societies.  Table  1 1 1  gives 
the  operations  in  this  connection  for  the  year  1906. 

There  were,  thus,  2299  appeals  against  the  decisions  of 
the  society  authorities,  of  which  1676  were  complete,  and  623 
were  partial  appeals.  The  courts  of  arbitration  decided  1945 
pending  claims  out  of  the  total  of  2299,  and  of  these,  1141  were 
entirely  dismissed  and  804  either  partially  or  completely  decided 
in  favor  of  the  appellant.  The  frequency  of  appeals  varies  in  the 
different  types  of  societies.  Thus  in  the  district  societies  there 
were  13.3  appeals  per  10,000  members;  in  the  trade  guilds  5.3;  in 

276 


AUSTRIA 

TABLE    III. — APPEALS  FROM  COURTS  OF  ARBITRATION   IN    SICKNESS 
INSURANCE  SOCIETIES,   1906 


District 

Factory 

Building 
Trades 

Trade- 
Guild 

Private 
Friendly 

Total 

Number  of  societies  . 

567 

1,248 

3° 

875 

197 

2,917 

Number  of  appeals  to  arbitra- 

tion courts: 

1,688 

238 

12 

229 

132 

2,299 

Because  of  complete    rejec- 

tion of  benefit  offered 

1,258 

152 

7 

172 

87 

1,676 

Because  of  partial  rejection 

of  benefit  offered  . 

43° 

86 

5 

57 

45 

623 

Results  of  appeals: 

Claims  withdrawn 

67 

i 

8 

3 

79 

Claims  compromised   . 

34 

1  1 

35 

6 

86 

Claims  decided  by  court: 

Denied       .... 

847 

"5 

4 

95 

80 

1,141 

Granted  completely  . 

343 

5' 

3 

44 

19 

460 

Granted  partially     . 

240 

58 

3 

30 

'3 

344 

Total  granted   . 

583 

109 

6 

74 

32 

804 

Unsettled  at  end  of  year 

75 

i 

1  1 

6 

93 

the  factory  3.4;  and  in  the  friendly  societies  2.5.     The  average  for 
all  societies  combined  was  7.8  per  10,000  members. 


277 


INSURANCE  AGAINST  INVALIDITY 
AND  OLD  AGE 


M 


XI 

INSURANCE  AGAINST  INVALIDITY 

OST  of  the  friendly  societies  of  Great  Britain  and  some 
sickness  insurance  societies  on  the  continent  cover 
total  and  permanent  as  well  as  temporary  disability,  but 
usually  for  a  greatly  reduced  benefit.  Ordinarily  no  distinction 
is  made  whether  disability  is  caused  by  old  age  or  not,  so  that 
in  effect,  although  not  in  name,  the  system  embraces  the  giving 
of  old  age  pensions.  The  rules,  however,  commonly  provide  that 
the  member  must  really  be  disabled,  and  the  mere  fact  that  he 
is  old,  if  he  is  not  otherwise  incapacitated,  will  not  give  the  right 
to  a  benefit.  The  liberality  of  various  societies  or  branches  in  deal- 
ing with  this  matter  differs  greatly.  It  might  be  supposed  that 
the  most  solvent  would  be  the  most  liberal;  but  doubtless  the 
fact  is  precisely  the  contrary,  as  in  most  cases  insolvent  societies 
or  branches  owe  their  condition  largely  to  over-liberality.  A 
serious  financial  difficulty  attaches  to  the  granting  of  invalidity 
and  old  age  benefits  because  of  the  length  of  time  the  benefits 
must  continue.  If  a  society  is  to  be  considered  solvent  the  pre- 
sent value  of  these  benefits  should  be  counted  among  its  lia- 
bilities. Computation  of  adequate  rates  and  determination  of 
reserves  are  therefore  rendered  complex  and  difficult. 

Questions  of  this  kind  have  complicated  the  rescue  of  the 
friendly  societies  of  Great  Britain  and  have  greatly  impeded 
their  progress  toward  solvency.  Difficulties  are  also  increased 
for  older  societies  by  the  creation  of  new  ones  which  collect  only 
enough  to  pay  indemnities  falling  due  from  month  to  month. 
In  recent  years  this  has  been  prevented  by  provisions  in 
the  Friendly  Societies  Act,  under  which  no  new  societies  can  be 
organized  except  with  adequate  rates,  certified  by  a  competent 
actuary  approved  by  the  Registrar  of  Friendly  Societies.  Older 

281 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

ones  are,  however,  still  struggling  with  financial  difficulties. 
Ignorance  concerning  the  nature  of  this  form  of  insurance  plunged 
them  into  insolvency  at  the  outset. 

Most  sickness  insurance  societies  on  the  continent  do 
not  pay  benefits  in  event  of  total  and  permanent  disability, 
or  "invalidity"  as  it  is  usually  called  in  countries  other  than 
Great  Britain  and  the  United  States.  By  confining  their  pay- 
ments to  a  relatively  short  term  of  disability  they  have  in  a 
measure  avoided  the  condition  of  almost  hopeless  insolvency 
common  to  societies  attempting  to  furnish  these  benefits.  An 
exception  to  the  above  rule  is  found  in  establishment  funds 
connected  with  individual  factories  or  other  establishments. 
These  funds,  set  on  foot  by  employers,  and  supported  invariably 
by  them  have  usually  provided  both  for  permanent  invalidity 
and  for  old  age  and  retirement  benefits.  In  fact,  not  infre- 
quently, these  are  the  sole  purposes  of  the  fund.  Even  when  sick- 
ness insurance  and  provision  for  dependents  in  event  of  death 
are  also  furnished,  the  employer  has  had  chiefly  in  mind  care  for 
the  old  age  of  those  remaining  in  his  employ,  and  their  support 
if  they  become  hopelessly  disabled  before  reaching  old  age. 

In  France  and  Germany,  such  provisions  were  made  in  the 
mining  industries  before  any  of  the  new  laws  for  workingmen's 
insurance  or  compensation  were  enacted.  This  was  also  the  case 
in  regard  to  the  marine  service,  to  steam  railways,  and  in  Germany 
to  the  great  Krupp  works  at  Essen.  At  the  present  time  in  Euro- 
pean countries  workmen's  compensation  statutes  provide  for  the 
support  of  a  wage-earner  totally  and  permanently  disabled  by 
accident  while  at  work.  In  other  words,  total  and  permanent 
disability  and  invalidity  arising  from  this  cause  are  now  taken 
care  of.  The  earlier  weeks  of  disability,  whether  permanent  or  not, 
without  regard  to  cause,  are  likewise  taken  care  of  by  obligatory 
insurance  in  Germany  and  Austria,  and  in  other  countries  to  a 
large  extent  by  voluntary  sickness  insurance. 

Invalidity  arising  from  causes  other  than  industrial  acci- 
dents became  a  matter  of  deep  concern  in  countries  where  govern- 
ment insurance  had  been  introduced.  In  Germany,  under  the 
earlier  laws  a  workman  disabled  beyond  a  period  of  thirteen 
weeks  had  no  longer  a  claim  on  a  sickness  insurance  society  and 

282 


INSURANCE    AGAINST   INVALIDITY 

unless  his  disability  was  due  to  an  industrial  accident  could  make 
no  demand  against  the  mutual  association  of  employers.  The 
German  government,  therefore,  proceeded  to  meet  this  contin- 
gency by  providing  an  exceedingly  small  contribution  out  of 
government  funds  toward  a  pension  to  be  paid  to  totally  and 
permanently  disabled  persons,  collecting  one-half  the  remaining 
cost  from  workmen  and  one-half  from  their  employers.  Partial 
and  permanent  disability  is  also  compensated  under  the  pro- 
visions of  this  invalidity  fund.  In  each  district,  authorities  are 
given  the  power  to  determine  the  degree  of  invalidity  and  to 
award  pensions  proportionate  to  impairment  of  earning  power. 
In  Austria,  on  the  contrary,  where  an  invalidity  fund  also 
exists,  the  government  does  not  allow  for  partial  and  perma- 
nent disability  unless  such  has  been  caused  by  industrial  acci- 
dent, when  the  employers'  association  is  required  to  pay  the 
pension. 

The  plan  in  each  of  these  countries  for  the  establishment  of 
an  invalidity  fund  is  fully  described  in  other  sections  of  this 
report.*  While  there  are  minor  differences,  under  either  system 
it  is  necessary  that  a  certain  minimum  number  of  payments  for  a 
period  of  years  shall  have  been  made  by  the  employe  before  he 
can,  in  event  of  total  and  permanent  disability,  be  entitled  to 
the  maximum  amount  provided  by  law.  If  he  becomes  disabled 
before  that  period  the  benefit  is  proportionately  reduced.  Under 
this  system  operated  in  both  countries  by  the  state  through  a 
bureau,  the  managers  of  which  are  appointed  by  the  govern- 
ment, there  has  apparently  been  much  more  simulation  than 
in  sickness  insurance  societies  or  among  claimants  against  mutual 
liability  insurance  associations  of  employers.  At  first  sight  it 
might  appear  that  this  is  to  be  expected.  It  is  not  easy 
to  pretend  one  has  suffered  from  accident  unless  there  are 
external  and  visible  signs,  and  the  entire  history  of  the 
injury  and  its  consequences  is  constantly  before  the  associa- 
tion of  employers  against  which  claim  is  made.  Moreover,  in 
the  first  instance  the  degree  of  impairment,  if  the  disability 
is  partial,  is  determined  by  the  association  of  employers,  and 

*See  Chapter  XVIII,  The  Reform  Project  in  Germany,  page  406,  and 
Chapter  XIX,  The  Reform  Project  in  Austria,  page  414. 

283 


INSURANCE    AGAINST    INVALIDITY    AND   OLD    AGE 

although  a  large  proportion  of  their  awards  are  appealed  from  to 
the  higher  authorities,  a  relatively  small  portion  are  reversed  or 
considerably  modified.  In  consequence,  simulation  is  rendered 
doubly  difficult. 

On  the  other  hand,  the  determination  both  as  to  the  fact 
of  permanent  disability  and  its  degree,  in  cases  of  insured  persons 
disabled  otherwise  than  by  industrial  accidents,  was  originally 
entrusted  to  local  authorities,  although  pensions  were  payable 
out  of  a  fund  collected  through  an  entire  kingdom  or  other  large 
government  district.  This  naturally  resulted  in  a  lax  administra- 
tion of  the  law.  Since  the  locality  contributed  to  the  fund,  the 
authorities  often  thought  it  excellent  policy  to  relieve  local  poor 
rates  by  acquiring  as  much  of  the  funds  for  disbursement  there 
as  could  be  done  with  a  good  face.  As  a  result  of  this  attitude 
the  amount  of  permanent  disability  and  especially  the  amount  of 
the  aggregate  of  awards  were  excessive  in  many  districts.  Cost 
of  invalidity  insurance  grew  much  higher  than  the  estimates  and 
increased  at  a  degree  not  justified  by  facts.  A  thorough  inves- 
tigation revealed  the  laxity  already  mentioned  and  proved  that 
a  larger  measure  of  control  and  supervision  should  be  placed  in 
the  hands  of  central  authorities.  A  general  revision  of  the  awards 
throughout  the  country  was  then  made;  as  a  result,  many  pen- 
sioners were  taken  from  the  list  altogether  on  discovery  that  they 
were  able  to  work  and  had,  in  fact,  been  working  most  of  the 
time.  A  much  larger  number  had  the  rate  of  pension  reduced 
on  the  ground  that  the  degree  of  impairment  of  earning  power 
was  not  so  great  as  had  been  represented. 

It  is  now  believed  that  the  pendulum  has  swung  too  far 
the  other  way.  Complaint  is  common  that  the  benefits  granted 
under  the  invalidity  law  of  Germany  are  at  present  entirely  inade- 
quate, being  in  fact  "  too  little  to  live  on,  and  too  much  to  die 
on,"  and  that  even  when  eked  out  by  whatever  the  pensioner  may 
be  able  to  earn  by  his  own  labor,  they  little  more  than  maintain 
him  in  a  condition  bordering  upon  starvation.  It  is  claimed  that 
this  is  true,  though  in  less  degree,  even  when  the  maximum 
pension  for  total  disablement  is  allowed. 

Large  funds  have  been  accumulated,  in  Germany,  in  con- 
nection with  invalidity  insurance.  Much  of  this  amount  has 

284 


INSURANCE   AGAINST   INVALIDITY 

been  invested  in  bonds  and  mortgages,  but  about  36  per  cent  has 
been  used  for  the  building  of  hospitals,  sanatoria  and  camps 
for  the  treatment  of  tuberculosis;  and  loans  have  been  made 
usually  at  3  per  cent  to  semi-philanthropic  companies  organized 
for  the  purpose  of  building  and  selling  workingmen's  tenements 
in  the  larger  cities,  and  dwelling  houses  in  the  suburbs  and  smaller 
cities.  Sales  are  made  on  favorable  terms  on  the  instalment 
plan,  and  payments  do  not  cost  much  more  than  rent  of  similar 
quarters.  The  company  which  erects  and  sells  the  property, 
mortgages  the  entire  apartment  building  or  the  entire  group  of 
houses,  but  is  under  an  obligation  to  apply  a  certain  portion  of 
the  instalments  received  to  the  re-payment  of  this  group  loan. 

Statutes  covering  total  and  permanent  disability  and  old 
age  have  been  in  operation  for  some  time  in  France,  the  benefits 
having  been  paid  entirely  by  the  government  and  by  the  com- 
munes. The  French  government,  however,  in  April,  1910,  sup- 
plemented this  legislation  by  additional  enactments  which  will 
provide  more  liberally  for  wage-earners  incapacitated  pre- 
maturely or  by  old  age,  through  a  fund  to  which  employers  and 
employes  will  contribute  and  which  the  state  will  subsidize. 
Under  this  new  law,  benefits  of  the  measure  previously  in  oper- 
ation will  be  confined  to  a  constantly  decreasing  number  of  per- 
sons who  are  now  too  far  advanced  in  years  to  meet  the  require- 
ments of  the  new  law.  The  large  public  burden  which  the 
non-contributory  pension  law  of  1905  now  entails,  will  thus  be 
materially  reduced  and  ultimately  removed. 

In  Sweden,  Denmark,  and  Norway  commissions  have  re- 
cently been  at  work  upon  the  subject  of  invalidity  and  old  age 
insurance.  Those  of  the  two  last  mentioned  countries  have 
made  their  reports. 

The  Norwegian  commission  recommends  that  a  compulsory 
system  of  invalidity  and  old  age  insurance  be  established  which 
shall  stand  actuarially  solvent,  the  state  to  pay  only  the  expenses 
of  operation.  Contributions  are  to  be  required  from  the  insured 
on  the  basis  of  payments  for  a  reasonable  term  of  years  and 
in  sufficient  amount  before  benefits  shall  be  given.  The  idea  is 
to  make  the  plan  thoroughly  solvent  financially  even  if  it  should 
cease  at  any  time  to  be  on  a  compulsory  basis,  so  that  all  who 

285 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

contribute  may  be  absolutely  assured  of  the  benefits  for  which 
they  have  paid.  The  method  of  operation  recommended  is  to 
require  payment  by  deduction  from  wages  in  the  case  of  wage- 
earners,  and  payment  by  purchase  of  stamps  by  all  others  who 
would  come  within  the  provisions  of  the  act. 

The  Danish  Commission  recommended  a  voluntary  plan 
with  rates  graded  according  to  age  or  else  amounts  of  benefits 
determined  by  age.  This  plan  involves  the  accumulation  of 
large  funds  in  order  to  insure  financial  solvency.  An  alternative 
obligatory  system  was  also  suggested  similar  to  that  in  use  in 
Germany  calling  for  only  a  small  amount  of  accumulation,  if  any, 
because  all  persons  in  Denmark  reaching  the  age  of  seventy  with- 
out a  certain  minimum  income  are  entitled  to  a  pension;  provision 
need  be  made,  therefore,  only  for  those  permanently  disabled  be- 
fore seventy  and  for  benefits  until  seventy. 

The  report  of -the  Swedish  commission  has  not  been  made 
and  its  character  is  not  fully  determined.  It  is  expected,  how- 
ever, that  it  will  embrace  a  provision  for  old  age  as  well  as  for 
premature  total  and  permanent  disability.  The  Swedish  govern- 
ment has  already  collected  a  considerable  sum  of  money 
which  is  being  held  for  the  purpose  of  starting  a  system  with  an 
old  age  feature. 


286 


XII 
OLD  AGE  ANNUITIES  AND   PENSIONS 

IN  this  chapter,  the  expression  "old  age  annuities"  is  used 
wherever  the  income  during  old  age  is  purchased  by  contri- 
butions, solely  or  chiefly,  from  persons  to  receive  the  benefits, 
and  the  expression  "old  age  pensions,"  wherever  the  income  is 
solely  or  chiefly  contributed  by  others. 

Prior  to  acceptance  of  the  proposition  that  it  is  desirable 
to  provide  for  the  old  age  of  the  working  classes  by  means  of 
pensions,  instead  of  supporting  them  through  the  poor  rates, 
three  distinct  methods  of  making  this  provision  had  grown  up. 

First,  through  friendly  societies,  in  connection  with  their 
provisions  for  support  during  sickness.  In  many  of  these,  inca- 
pacity due  to  old  age  has  been  treated  precisely  like  any  other 
sickness.  In  not  a  few  the  mere  fact  of  having  reached  a  cer- 
tain age,  such  as  seventy,  has  been  treated  as  sickness.  In 
other  words,  old  age,  with  the  permanent  incapacity  attending  it, 
has  been  dealt  with  as  if  it  were  a  sort  of  invalidity  to  be  taken 
care  of  in  the  same  manner.  This  course  has  been  accompanied 
with  serious  consequences.  Contributions  of  friendly  and  sick- 
ness insurance  societies  were  at  the  outset  usually  kept  down  to 
current  requirements,  no  effort  being  made  to  accumulate  funds 
to  cover  increasing  hazard  for  payments  to  be  made  because  of 
sickness  and  invalidity  benefits  already  incurred.  In  view  of  this, 
as  has  already  been  explained  in  the  chapter  on  sickness  insurance 
societies,  most  of  these  societies  have  been  obliged  to  dissolve,  and 
only  by  means  of  radical  and  even  drastic  revisions  of  rate  tables 
have  any  of  them  been  enabled  to  survive. 

One  of  the  chief  causes  for  their  difficulties  has  been 
the  inclusion  among  the  benefits  provided  of  what  practically 
amounted  to  old  age  pensions.  How  to  supply  such  pensions  by 
means  of  contributions  in  a  voluntary  society  where  there  is  no 

287 


INSURANCE    AGAINST   INVALIDITY   AND  OLD   AGE 

compulsion  upon  young  men  to  enter  or  to  remain,  the  only  in- 
ducements being  the  benefits  they  are  to  receive  now  or  in  the 
future,  has  been  a  problem.  Plainly,  an  accumulating  fund 
derived  from  the  contributions  of  members  up  to  the  time  when 
pensions  become  payable  and  thereafter  diminishing  as  they  are 
paid,  until  death  relieves  the  society  of  such  payment,  is  absolutely 
necessary.  Yet  this  requirement  is  precisely  what  was  not  fore- 
seen at  the  outset  and  what  is  even  now  most  difficult  for  the 
societies  to  deal  with.  It  is  largely  due  to  the  fact  that,  in  the 
opinion  of  workingmen,  the  demands  upon  their  income  to 
provide  for  present  necessities,  including  protection  against  acci- 
dent and  disability  by  insurance,  are  of  more  immediate  and 
pressing  importance  than  provisions  for  old  age.  It  will  be  found 
upon  further  consideration  that  this  is  not  so  true  in  Latin  as  in 
Germanic  countries,  including  Great  Britain,  and  that  there  are 
special  reasons  at  work  in  certain  of  the  former  to  cause  an  en- 
tirely different  view  to  be  taken. 

The  second  method  of  caring  for  aged  workingmen  was 
by  means  of  establishment  or  industry  funds,  created  with  the 
special  object  of  providing  for  the  retirement  of  employes  who  had 
continued  with  a  particular  establishment  or  in  a  particular  indus- 
try until  the  age  of  seventy,  sixty-five  or  even  sixty.  Though 
this  is  not  always  the  case,  these  funds  have  frequently  been 
founded  after  consultation  with  competent  actuaries  and,  except 
for  disappointments  because  of  the  smallness  of  membership, 
have  been  satisfactory;  they  have  been  solvent  from  the  start 
and  have  been  so  maintained.  As  stated,  there  are  exceptions  to 
this.  Funds  have  been  established  without  any  regard  to  what 
could  be  fairly  expected  in  the  way  of  benefits  from  the  rates  of 
contributions  provided.  Under  such  circumstances,  benefits  much 
larger  than  the  fund  could  afford  have  been  allowed  those  who 
first  became  claimants,  with  the  result  that  it  became  insufficient 
to  furnish  surviving  members  such  amounts  as  at  the  outset  could 
have  been  secured  to  all. 

Although  it  must  be  acknowledged  that  in  some  cases, 
particularly  among  bank  employes,  clergymen  of  a  given  denom- 
ination, railway  employes,  or  the  like,  pension  funds  have 
accomplished  great  good  and  have  done  much  to  direct  public 

288 


OLD    AGE    ANNUITIES    AND    PENSIONS 

attention  to  the  necessity  for  making  provision  of  this  character, 
the  general  experience  in  regard  to  such  pension  funds  is  unsatis- 
factory. The  results  have  been  summed  up  with  accuracy  by 
Henry  W.  Manly,  F.I. A.,  F.F.A.,  one  of  the  most  distinguished 
actuaries  of  Great  Britain,  and  the  author  of  the  most  compre- 
hensive study  of  this  subject  from  a  practical  standpoint.  His 
brief  and  pointed  comments  are  given  herewith.* 

"Funds  intended  to  provide  a  retiring  allowance  for  the 
members  of  a  staff,  are  started  by  employers  with  the  very  best 
intentions,  but  it  is  doubtful  whether  they  have  ever  proved 
altogether  satisfactory.  They  have  the  tendency  to  breed  a  dis- 
contented spirit  amongst  the  employes,  and  in  some  cases  have 
proved  more  costly  to  the  employers  than  if  they  had  created 
their  own  reserves  and  promised  to  give  a  guaranteed  scale  of 
superannuation  for  long  and  faithful  service. 

"The  general  principle  is  undoubtedly  good,  and  morally 
sound  in  the  abstract,  but  it  takes  no  account  of  the  weakness  of 
human  nature.  The  principle  that  everyone  should  make  a  pro- 
vision for  his  old  age  is  one  which  we  shall  all  approve.  To  en- 
courage this  principle,  the  employer  says  to  his  employes: 

"  'If  you  will  all  consent  to  contribute  a  percentage  of  your 
salaries  to  create  a  Fund  for  providing  pensions  in  your  old  age, 
I  will  subscribe  an  equal  amount  each  year;'  or,  'I  will  give  you 
a  sum  down  to  start  the  Fund.'  Sometimes  he  adds:  'and  I  will 
guarantee  that  the  Fund  shall  be  accumulated  at  a  fixed  rate  of 
interest.'  In  this  way  he  feels  that  he  has  acted  the  part  of  a 
philanthropist  in  encouraging  thrift;  he  thinks  that  his  staff 
will  be  more  contented  and  settled,  and  are  not  likely  to  leave 
him  when  they  have  a  stake  in  the  Fund;  and  he  has  allayed  an 
uneasy  conscience  which  half  recognized  an  unpleasant  respon- 
sibility to  help,  in  his  old  age,  a  man  who  has  given  him  a  life- 
long service.  The  employe's  view  of  the  arrangement  is  very 
different.  To  him  the  contribution  is  a  hardship  and  an  obnox- 
ious tax;  and,  although  he  gave  his  consent  to  subscribe,  it  was 
an  agreement  made  under  moral  compulsion.  What  benefit  will 
it  be  to  him?  He  will  never  live  to  sixty-five!  and,  if  he  does,  he  is 
not  going  to  stick  in  that  firm  all  his  life.  He  does  not  see  why  he 
should  be  taxed  for  the  benefit  of  the  old  members  of  the  staff, 
who  will  be  retiring  soon.  The  governors  might  at  least  raise 
their  salaries  to  enable  them  to  pay  the  tax.  And  if  the  employer 
does  take  a  generous  view  of  the  case  and  raise  their  salaries,  the 
contribution  to  the  Fund  does  not  cease  to  be  a  tax.  It  is  always 

*  Manly,  H.  W.:  Valuation  of  Staff  Pension  Funds.    London.     Page  7. 
'9 F  289 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

a  tax,  and  is  always  very  good  excuse  for  asking  for  increase 
of  salary. 

"Now,  where  there  is  taxation,  there  should  always  be 
representation;  and  the  staff  are  generally  invited  to  elect  rep- 
resentatives as  managers  of  the  Fund,  the  employers  nominating 
the  trustees  and  reserving  to  themselves  certain  powers.  The 
men,  starting  with  the  idea  that  they  are  never  likely  to  live  to 
sixty-five,  want  to  arrange  to  have  their  money  back  somehow. 
If  they  could  have  a  pension  at  fifty  or  fifty-five,  or  even  sixty, 
that  might  make  a  difference;  but,  even  then,  they  would 
like  to  have  their  money  back  if  they  did  not  live  to  get  a  pension. 
This,  then,  is  the  kind  of  reasoning  which  takes  place:  Firstly, 
'Suppose  we  leave  the  service,  it  would  not  be  right  or  just 
that  you  should  keep  our  subscriptions;'  and  it  is  agreed  that, 
on  leaving  the  service,  the  member's  own  subscriptions  shall  be 
returned  to  him  without  interest.  Secondly,  'What  is  to  happen 
if  we  die  before  reaching  the  pension  age?  My  wife  and  family 
ought  to  have  the  benefit  of  the  Fund;'  and  so  it  is  agreed  that 
in  case  of  death  before  the  pension  age,  the  employer's  and  his 
own  subscriptions  shall  be  returned  without  interest,  or  his  own 
subscriptions  with  compound  interest  shall  be  paid  over,  or 
both  his  own  and  his  employer's  subscriptions,  with  compound 
interest,  shall  be  paid  out.  Thirdly,  'Suppose  a  man  has  to 
retire  through  ill-health  before  the  pension  age,  what  is  to 
be  done  for  him?'  Well,  he  might  be  treated  in  the  same  way 
as  if  he  died;  or  he  may  have  his  pension  according  to 
scale.  Fourthly,  'But  then,  a  man  might  die  directly  he 
reached  the  pension  age,  or  after  he  has  only  received  his  pension 
for  one  year;  it  would  not  be  fair  to  his  family  that  all  his 
subscriptions  for  a  lifetime  should  be  left  in  the  Fund.'  And  so 
it  is  agreed  that  if  a  member  dies  before  his  pension  receipts 
amount  to  what  he  has  paid,  the  balance  shall  be  paid  to  his  family. 

"The  above  are  the  principal  provisions  found  in  the  Rules; 
and  if  they  are  not  there  already,  you  may  be  perfectly  certain 
that  they  soon  will  be.  Sometimes  there  will  be  a  provision  that 
no  return  is  to  be  made  if  the  member  leaves  the  service  within 
five  years;  and  no  retiring  allowance  until  after  ten  years;  and 
occasionally  minimum  and  maximum  pensions  are  fixed.  The 
last  is  not  a  bad  provision  where  there  are  one  or  two  highly  paid 
individuals  whose  contributions  would  provide  but  an  insignificant 
portion  of  their  pensions  according  to  scale.  The  men  are,  as  a 
rule,  generously  inclined  towards  those  of  their  comrades  who 
break  down  in  the  service,  and  will  sometimes  provide  that  if  a 
man  has  to  retire  after  10  years'  service  it  shall  be  counted  as  is 
for  the  purpose  of  calculating  his  pension;  after  15  years  he  shall 

290 


OLD    AGE    ANNUITIES    AND    PENSIONS 

be  treated  as  if  he  had  subscribed  17^  years,  and  so  on.  These  I 
call  excrescences,  which  must,  as  a  rule,  be  dealt  with  separately. 
"As  to  the  scale  of  pension,  it  is  always  based  on  years  of 
service,  and  generally  on  average  salary,  but  sometimes  on 
salary  for  the  last  year,  or  the  average  of  the  last  three  years. 
It  is  quite  evident  that  all  these  numerous  provisions  for  the 
return  of  contributions  must  decrease  the  pension  which  other- 
wise could  be  given." 

These  pension  schemes  range  all  the  way  from  the  most 
crass  exploitation  of  employes  on  the  part  of  employers,  en- 
deavoring to  masquerade  as  humanitarians  and  altruists,  to  plans 
for  "service  pensions"  which  have  involved  the  compensation  of 
retired  workingmen  or  other  employes  entirely  out  of  funds  given 
by  the  employer.  Contributions  by  employers  have  varied  from 
the  mere  payment  of  the  cost  of  administering  the  fund  with 
perhaps  a  guarantee  of  a  certain  rate  of  interest  (operating  some- 
times as  a  cover  to  use  the  money  in  the  employer's  business),  to 
the  payment  of  the  entire  amount  necessary  to  maintain  it. 

Such  funds,  especially  in  case  of  a  "service  pension,"  un- 
doubtedly have  great  advantages.  Even  if  employes  have  been 
permitted  or  required  to  contribute,  these  funds  have,  when  broadly 
and  generously  applied,  had  the  effect  of  encouraging  habits  of 
thrift  and  in  some  cases  of  causing  a  better  understanding  between 
employer  and  employes.  1 1  is  obvious,  however,  that  such  a  system 
reaches  only  a  small  percentage  of  the  working  population  who 
live  to  old  age,  and  even  only  a  small  percentage  of  those  in  the 
service  of  a  given  employer,  since  the  vast  majority  of  them 
leave  his  employment  too  early  to  obtain  the  benefits  of  such 
a  provision. 

The  third  method  of  providing  for  aged  workingmen  was 
as  follows:  In  certain  countries  including  Great  Britain,  France, 
Belgium,  Holland,  Denmark,  Sweden,  Italy  and  Spain,  an  oppor- 
tunity has  been  offered  by  the  government  itself  through  govern- 
ment institutions,  such  as  the  post  office  or  the  post  office  savings 
bank,  for  any  person  to  purchase,  on  favorable  terms,  an  old  age 
annuity,  technically  known  as  a  deferred  annuity.  In  Great  Bri- 
tain, the  government  has  been  offering  such  annuities  for  seventy- 
five  years,  private  life  insurance  companies  also  offering  them 

291 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

on  about  the  same  terms.  The  result  is  that  a  large  business  has 
been  transacted,  but  not  to  any  great  extent  upon  the  lives  of 
workingmen.  These  have  turned  to  the  friendly  societies,  pur- 
chasing this  protection  as  one  of  the  benefits,  indistinguishably 
mingled  as  to  cost,  as  we  have  seen,  with  sickness  and  invalidity 
insurance. 

In  Denmark  there  has  been  not  only  an  increase  in  life 
annuities  purchased  from  the  state,  but  also  a  larger  development 
than  in  any  country  of  survivorship  annuities,  payable  to  the  wife 
upon  the  death  of  the  husband,  or  vice  versa,  or  to  children  upon 
the  death  of  a  parent.  These,  however,  have  been  bought  chiefly 
by  the  well-to-do  and  members  of  the  middle  class.  The  purchase 
of  such  annuities  in  other  Scandinavian  countries  has  not  been 
so  great.  In  Norway,  it  is  chiefly  confined  to  retired  members  of 
the  civil  service.  In  France,  as  in  most  Latin  countries  and 
those  influenced  by  Latin  civilization,  the  increase  of  annuities 
has  been  much  greater,  particularly  among  small  proprietors, 
employes  in  stores  and  offices,  government  employes  and  the 
like;  but  in  spite  of  every  encouragement,  this  form  of  provision 
for  old  age  has  not  been  as  largely  utilized  by  workingmen  as 
had  been  hoped.  The  large  development  in  France  is  attributa- 
ble perhaps,  to  three  things: 

(1)  To  the  extraordinary  thrift  of  the  French  people  and 
especially  of  the  middle  classes. 

(2)  To  the  system  of  "dots"  or  marriage  portions  and  to  the 
limitation  of  families.     Children  are  well  provided  for  at  the  time 
of  marriage,  with   the  result  that  the  demand  for  life  insurance 
is  less  than  in  Germanic,  Scandinavian  and  Anglo-Saxon  countries. 

(3)  To   assistance   given    by  the   government,  which   has 
encouraged   the    purchase    of  old    age  pensions    in   two  ways, 
namely :    (a)   By  offering  rates  so  low  that  they  are  actually  at  cost 
and  possibly  somewhat  below  cost,  being  computed  at  a  more 
liberal  rate  of  interest  than  the  government  is  required  to  pay  on 
its  bonds.     In  other  words,  the  government   is   making  a  liberal 
subvention   to  purchasers  of  old  age   annuities   by   allowing  a 
higher  rate  of  interest    than    it    needs  to  pay   upon    borrowed 
money,  and  by  using  a   mortality  table  which  results  in  a  con- 
siderable   additional  loss.       (b)   By  offering  a   still    higher  rate 

292 


OLD    AGE    ANNUITIES    AND    PENSIONS 

of  interest  upon  funds  deposited  with  it  by  mutual  insurance 
societies,  to  be  applied  to  the  purchase  of  old  age  annuities. 
A  better  bargain  can  be  obtained  for  an  individual  through 
mutual  societies  than  by  purchasing  an  annuity  from  the  gov- 
ernment directly.  When  the  designated  age  is  attained,  the  sum 
deposited  with  the  society  with  its  larger  accumulations,  is  ap- 
plied by  the  government  to  furnish  an  immediate  annuity. 
French  parents  of  the  middle  class,  having  been  freed  by  the 
"dot"  or  marriage  portion  system,  supplemented  by  savings  bank 
accumulations  and  the  like,  from  the  necessity  of  making  a  con- 
siderable expenditure  for  life  insurance,  consider  themselves 
bound,  as  a  means  of  preserving  dignified  independence,  to  pro- 
vide for  their  own  support  during  old  age. 

To  these  three  methods  must  be  added  a  variation  intro- 
duced by  the  German  government  as  an  extension  of  its  systems 
of  workingmen's  insurance.  It  consists  in  making,  as  do  friendly 
societies,  provision  for  old  age  a  component  part  of  a  guarantee 
against  invalidity.  Thus,  the  German  invalidity  insurance  system, 
requiring  equal  contributions  by  employes  and  employers,  supple- 
mented by  an  annual  subvention  from  the  government,  covers 
permanent  invalidity  up  to  the  age  of  seventy  and  pays  an 
annuity  from  that  time  on,  whether  the  insured  is  physically 
disabled  or  not. 

The  German  system  is,  therefore,  about  half  way  between 
an  "annuity"  and  a  "pension"  system.  It  is  neither  a  pure 
assessment  plan,  under  which  only  enough  is  currently  collected 
to  meet  present  demands  for  instalments  of  invalidity  and  old  age 
pensions,  nor  a  "capitalized  system"  under  which  the  current 
contributions  are  sufficient  to  set  up  "present"  or  "  capitalized" 
values  of  invalidity  or  old  age  annuities  at  the  time  liability  is 
incurred.  It  is  sometimes  called  an  "average  premium"  system 
under  which,  according  to  the  computations  of  government  stat- 
isticians and  actuaries,  it  is  believed  that  the  rate  of  contribu- 
tion can  be  maintained  with  reasonable  uniformity.  It  really 
depends  for  its  sufficiency  upon  the  fact  that,  at  the  minimum 
age,  workingmen  are  compelled  to  enter  as  contributors  to  the 
fund.  It  aims  to  establish  a  rate  from  the  outset,  nearly  the 
same  as  would  be  attained  under  the  assessment  system  by  the 

293 


INSURANCE    AGAINST    INVALIDITY   AND   OLD    AGE 

time  the  youngest  contributor,  admitted  at  its  organization,  had 
reached  the  age  of  seventy,  when  there  would,  of  course,  be  repre- 
sented among  the  claimants  against  the  fund,  members  of  succes- 
sive generations.  This  would  give  a  reasonably  stable  average  of 
claims  and  contributions. 

The  chief  objection  which  has  been  urged  against  the 
German  invalidity  insurance  system,  as  now  administered,  namely, 
too  severe  scrutiny  of  the  merits  of  claims,  cannot  be  brought, 
with  the  same  force,  against  that  portion  of  the  system  which 
administers  old  age  annuities,  for  the  reason  that  the  granting  of 
annuities  after  one  has  attained  the  age  of  seventy  is  not  subject 
to  proof  of  actual  invalidity. 

Employers  and  property  owners  object  that,  under  the 
above  scheme,  because  it  is  not  purely  an  assessment  plan,  a 
large  fund  accumulates  which,  though  it  is  not  sufficient  to  meet 
the  requirements  of  a  voluntary  scheme,  calling  for  setting  up 
"present"  or  "capitalized"  values,  is,  nevertheless,  large  enough 
to  divert  enormous  sums  from  the  usual  channels  of  industry 
into  special  investments.  These  are  often  of  a  comparatively 
unprofitable  character,  selected  with  regard  to  safety  only,  or  to 
forward  government  projects  without  any  reference  to  remunera- 
tive returns.  For  instance,  as  explained  elsewhere,  funds  are 
invested  in  the  construction  of  sanatoria  or  in  loans  towards 
building  model  apartments  or  homes,  the  latter  to  be  sold  to 
workingmen  on  weekly  or  monthly  payments  through  the  inter- 
mediary of  companies  organized  for  the  purpose. 

It  is  not  charged  that  these  investments  have  so  far  proved 
unwise  or  that  the  principal  and  interest  have  not  been  amply 
secured.  The  objection  raised  by  employers  accustomed  to  an 
assessment  system  in  accident  insurance  associations  with  its 
minimum  of  accumulation,  is  that  a  large  portion  of  their  con- 
tributions were  not  required  and  could  have  been  left  in  their 
hands  for  business  purposes;  also,  that  if  similar  sums  had 
not  been  collected  from  workingmen,  they  would  have  found 
their  way  into  the  usual  channels  of  business,  creating  a  wider 
market  in  proportion  to  increased  purchasing  power.  These 
objections,  however,  are  disappearing  as  the  plan  continues  in 
operation,  and  are  losing  their  validity  because,  even  under  an 

294 


OLD   AGE    ANNUITIES    AND    PENSIONS 

assessment  system,  the  outlay  would  have  approached  the  pres- 
ent cost  and  the  income  on  investments  is  somewhat  reducing  it. 

There  are,  then,  four  methods  by  which,  under  an  insur- 
ance system,  old  age  annuities  may  be  furnished  on  an  obligatory 
basis  by  means  of  the  contributions  of  persons  who  are  to  become 
recipients  if  they  survive  a  given  age: 

First,  the  purely  assessment  system,  under  which,  as  in 
the  German  mutual  associations  of  employers  for  insurance 
against  liability  for  industrial  accidents,  contributions  would 
be  called  for,  sufficient  in  amount  only  to  cover  the  sums  cur- 
rently paid  to  annuitants,  no  effort  being  made  to  set  up  capital- 
ized values.  Under  this  system  the  cost  would  be  very  low  at 
the  outset,  and  after  contributors  who  entered  at  the  youngest 
age  had  reached  the  period  at  which  the  annuity  became  payable, 
would  attain  a  maximum  and  presumably  an  equilibrium.  This 
precise  method  is  not  in  use  in  any  country. 

Second,  the  capitalized  value  method,  under  which  con- 
tributions would  be  collected  sufficient  to  set  up  capitalized 
values  for  each  annuity  at  the  date  it  becomes  a  liability.  This 
would  call  either  for  supplying  only  fractional  annuities  to  those 
of  the  present  generation  who  would  not  have  contributed  through- 
out the  full  term,  or  else  for  larger  premiums  graded  according 
to  the  age  at  which  they  began  their  payments,  and  sufficient  to 
provide  their  respective  annuities. 

Third,  the  "  average  premium  "  method  actually  adopted  in 
Germany,  under  which  the  premium,  fixed  approximately  at  the 
same  figure  for  all  ages  of  entry,  will  suffice,  it  is  believed,  to  furnish 
annuities  permanently  after  a  maximum  expenditure  per  contribu- 
tor has  been  reached.  Under  this  plan  a  certain  minimum  number 
of  contributions  is  required  from  each  beneficiary  in  default  of 
which  no  annuity  is  paid. 

Fourth,  a  method  under  which  each  future  beneficiary 
would  be  required  to  make  approximately  the  contribution  which 
would  be  necessary  for  the  youngest  age,  this  sum  to  be  paid 
throughout  the  entire  term.  If,  under  a  capitalized  value 
method,  funds  were  not  expected  to  earn  interest,  such  entire 
contributions  could  be  applied  at  once  and  constantly  to  give  the 
full  annuity  to  all  now  over  the  age  of  seventy,  and  to  all  who 

295 


INSURANCE   AGAINST   INVALIDITY   AND  OLD   AGE 

hereafter  reach  the  age  of  seventy,  without  regard  to  whether 
they  have  paid  the  maximum  amount  in  contributions  or  not. 
Under  such  a  system  the  element  of  security  furnished  by  the 
promise  of  the  government  to  maintain  the  factor  of  compulsion 
takes  the  place  of  the  reserve  which  would  have  accumulated 
out  of  payments  actually  made,  had  not  a  portion  of  the  con- 
tributions been  applied  toward  granting  benefits  to  persons  who 
had  not  fully  contributed  to  secure  them. 

Systems  of  old  age  annuities  or  pensions  of  a  contributory 
type  are  now  under  consideration  in  several  countries,  notably 
Austria,  Sweden  and  Norway.  In  France  such  a  plan,  applying 
to  all  wage-earners  and  supplementing  the  old  age  pension  law 
already  in  force,  became  law  in  1910.  This  is  all  the  more  sig- 
nificant in  view  of  the  fact  that  the  German  contributory  system 
does  not  at  first  appeal  strongly,  since  payment  of  benefits  is 
long  deferred  and  the  advantages  are  not  as  apparent  as  under 
an  old  age  pension  plan,  examples  of  which  are  now  to  be  found 
in  Denmark  and  Great  Britain.  Benefits  so  deferred  fail  to 
appeal  to  a  nation  in  much  the  same  way  that  they  fail  to 
appeal  to  individuals. 

In  Austria,  Sweden  and  Norway  preliminary  steps  have 
been  taken  toward  instituting  a  system  either  of  old  age  annui- 
ties or  pensions,  and  commissions  have  studied  the  subject  or  are 
now  investigating  it.  Doubtless,  the  scheme  ultimately  to  be 
adopted  will  be  influenced  by  what  has  already  been  done,  or 
may  in  the  meantime  be  inaugurated  in  other  branches  of  obli- 
gatory insurance.  At  the  present  time,  Austria  has  in  force 
systems  of  obligatory  insurance  similar  to  those  in  Germany, 
covering  everything  except  old  age  and  invalidity.  It  seems 
probable,  therefore,  that  the  next  step  will  be  to  adopt  an  old  age 
annuity  system  similar  to  that  of  Germany,  the  one  change 
being  the  possibility  that  Austria  will  go  further  in  setting  up 
sufficient  capitalized  values  or  reserves.*  At  the  same  time  the  one 
departure  made  in  Austria  from  the  German  plan  of  mutual  asso- 
ciations of  employers,  provided  for  the  setting  up  of  capitalized 
values.  This,  as  has  already  been  stated,  has  not,  however, 
worked  out  satisfactorily  in  practice.  Nevertheless,  if  any  great 

*  See  Chapter  XVIII,  The  Reform  Project  in  Austria,  page  414. 
296 


OLD    AGE    ANNUITIES    AND    PENSIONS 

change  is  made  from  the  German  pension  system,  Austria  is 
likely  to  go  further  in  setting  up  capitalized  values. 

In  Norway,  two  able  actuaries  who  are  members  of  the 
committee  investigating  the  subject,  are  strongly  in  favor  of 
modeling  their  system  strictly  upon  the  capitalized  value  basis, 
so  that  it  could  stand  alone,  and  be  entirely  solvent  even  though 
compulsion  were  abandoned.  It  will  be  remembered  that  this 
is  precisely  what  has  been  done  in  Norway  in  the  matter  of  the 
insurance  of  employers  against  liability  for  accidents,  this  being 
compulsory  and  in  a  state  department  that  maintains  the  full  re- 
serves required  to  set  up  capitalized  values.  Should  this  system 
therefore  be  adopted  in  Norway,  no  person  would  receive  the  maxi- 
mum annuity  until  those  who  entered  at  an  age  sufficiently  young 
to  enable  them  to  make  the  requisite  maximum  number  of  pay- 
ments reach  the  age  at  which  their  annuities  should  begin.  All 
who  at  the  time  the  act  would  take  effect  were  of  a  higher  age 
than  this,  would  receive  a  reduced  amount  per  annum.  This 
portion  of  the  report  of  the  committee  has  not  been  adopted. 

In  Sweden,  where  no  obligatory  insurance  of  any  kind  has 
yet  been  introduced,  the  nature  of  the  report  of  the  committee, 
which  has  not  yet  been  rendered,  is  even  more  problematical. 
A  large  fund  has  been  accumulated  by  the  government  for  the 
purpose  of  enabling  an  old  age  annuity  or  pension  plan  to  be 
instituted  and  for  increasing  the  benefits  which  will  be  derived 
solely  from  contributions.  The  two  things  done  by  the  govern- 
ment in  Sweden  to  encourage  the  insurance  of  workingmen, 
namely,  the  granting  of  subsidies  to  sickness  insurance  societies, 
and  the  establishing  of  a  state  department  for  insurance  against 
accident  liability  of  such  employers  as  choose  to  patronize  it, 
afford  little  material  upon  which  to  venture  a  forecast  of  the 
probable  nature  of  the  forthcoming  report.  The  accumulation 
of  a  large  fund  in  advance,  however,  indicates  that  some  kind  of 
subsidy  or  subvention,  even  if  the  system  should  be  obligatory,  is 
intended.  This  might  take  the  form,  as  in  Germany,  of  an  addi- 
tional sum  added  by  the  government  to  the  annuity  purchased 
by  contributions  of  the  beneficiary,  or  may  indicate  the  govern- 
ment's intention  to  supplement  the  amount  for  those  of  the 
present  generation,  who,  when  they  reach  the  age  at  which  annui- 

297 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

ties  begin,  will  not  have  made  the  required  number  of  contri- 
butions. 

The  only  country,  therefore,  which  at  the  present  time  has 
in  actual  operation  a  system  of  obligatory  insurance  against  old 
age,  is  Germany,  though  the  system  France  has  recently  adopted 
is,  on  the  whole,  similar.  The  German  plan,  as  has  been  said,  is 
neither  purely  a  pension  nor  an  old  age  annuity  system,  since 
contributions  are  required  from  both  employes  and  employers 
in  an  equal  amount;  and  these  sums  are  supplemented  by  the 
addition  to  the  pension  of  50  marks  ($12.50)  per  annum,  from 
the  government.  It  is,  of  course,  argued  that  payments  made 
by  employers  are,  as  in  other  forms  of  workingmen's  insurance, 
intended  to  cover  the  "occupation"  hazard,  and  are  justified  in 
principle,  as  far  as  the  invalidity  or  total  and  permanent  disability 
benefit  is  concerned,  if  not  as  regards  the  amount  of  contribu- 
tion required.  Although  such  benefit  is  only  for  invalidity  caused 
by  sickness  (provision  for  support  during  disability  caused  by 
accident  being  made  by  employers  through  compulsory  insurance 
against  their  liability),  it  is  doubtless  true  that  many  total  and 
permanent  disablements  are  due  to  occupational  diseases.  So  far 
as  old  age  annuities  are  concerned,  however,  arguments  are  not  so 
convincing  because  survival  to  an  advanced  age  would  indicate, 
rather,  that  the  occupation  had  conduced  to  longevity. 

Yet  employers  in  all  countries  have  been  more  disposed  to 
contribute  toward  and  to  encourage  annuity  or  pension  plans, 
than  plans  of  insurance  against  accident  or  sickness.  This  dis- 
position, however,  has  been  confined  to  making  provision  for 
support,  during  old  age,  of  persons  who  had  been  in  their  employ- 
ment a  long  time,  and  who  had  reached  the  required  age.  This 
has  been  due  chiefly  to  two  sentiments:  to  a  desire  to  retire  old 
employes  for  the  good  of  the  service,  without  doing  them  the 
injustice  of  leaving  them  without  means  of  subsistence;  and  to 
sentiments  of  humanity  and  appreciation  of  faithful  service  dur- 
ing a  long  period.  This  would  have  no  application,  however,  to 
persons  who  had  left  their  employment  long  before  reaching  old 
age;  and  there  are  few  cases,  if  any,  where  employers  have  been 
willing  that  payments  into  such  a  fund  made  by  them  should  be 
withdrawn  by  employes  upon  leaving. 

298 


OLD     AGE     ANNUITIES     AND     PENSIONS 

It  is  therefore  difficult  to  classify  the  German  system,  so 
far  as  the  old  age  provision  is  concerned,  either  as  an  old  age 
annuity  or  a  pension  system.  It  is,  however,  unquestionably  an 
insurance  system,  under  which  persons  who  may  receive  benefits 
pay  premiums.  The  remaining  amount  necessary,  with  the  ex- 
ception of  the  relatively  small  sum  added  by  the  state,  is  con- 
tributed by  employers  who  subscribe  to  other  forms  of  insur- 
ance for  their  employes  as  well. 

Denmark  for  fifteen  years  past,  and  France  and  England 
for  the  brief  period  of  only  four  and  two  years,  respectively, 
have  been  making  use  of  a  system  of  old  age  pensions,  pure  and 
simple.  This  is  also  the  case  in  Australia  and  New  Zealand.  The 
system  differs  from  the  old  age  annuity  or  even  old  age  insurance 
system  in  that  the  pensions  are  not  in  any  sense  purchased,  con- 
tributions to  furnish  them  being  levied  against  the  public  at  large 
in  the  form  of  general  or  special  taxes.  In  order  to  receive  the 
pension,  it  is  necessary  that  the  beneficiary  should  not  be  in 
receipt  of  an  income  in  excess  of  a  certain  amount  named  in  the 
respective  laws.  The  last  mentioned  feature  might  conceivably 
be  incorporated  into  an  insurance  system,  and  especially  a  sys- 
tem such  as  the  fourth  in  the  category  described  above,  where 
the  contributions  are  deemed  a  "consideration"  for  an  old  age 
annuity  and  do  not  necessarily  go  to  constitute  a  fund  from  which 
they  arise.  This  is  possible  because  it  is  entirely  feasible  for  an 
insurance  system  to  cover  not  merely  the  risk  of  surviving  be- 
yond the  given  age,  but  the  risk  of  surviving  coupled  with  the 
risk  of  having  failed  to  accumulate  property  sufficient  to  provide 
a  certain  minimum  income.  Indeed  it  must  be  conceded  that 
any  system  of  old  age  annuities  or  pensions  is  not  entirely  com- 
prehensive, in  the  sense  that  every  member  of  the  community 
who  reaches  old  age  without  some  other  adequate  provision  for 
maintenance  will  be  supported,  unless  it  does  cover  this  hazard 
as  to  members  of  the  community  who  may  not  be  wage-earners 
during  any  part  of  their  lives. 

Unquestionably,  considerations  such  as  these  have  com- 
pelled the  countries  mentioned  to  introduce  old  age  pension 
systems  which  in  reality  are  substitutes  for  old  age  relief  systems, 
since  they  differ  from  the  latter  chiefly  in  the  absence  of  stigma 

299 


INSURANCE    AGAINST    INVALIDITY    AND   OLD    AGE 

attaching  to  the  beneficiary  and  in  the  fixed  character  of  the 
benefits  to  be  paid.  The  sources  from  which  these  are  obtained 
are  practically  the  same  as  before;  that  is,  they  are  general  or 
special  taxes,  neither  contributed  through  nor  by  the  persons 
who  are  to  receive  the  benefits,  nor  by  those  of  the  class  in  which 
most  of  the  persons  who  will  receive  these  benefits  in  the  future 
are  to  be  found. 

In  Denmark,  for  instance,  prior  to  the  introduction  of  the 
old  age  pension  system,  relief  of  the  indigent  aged  had  been  by 
an  outdoor  relief  system.  The  chief  difference  between  the  old 
age  pension  and  the  relief  system,  which  was  previously  uni- 
versally in  use,  is  that  old  age  pensions  are  not  given  if  one 
has  been  in  receipt  of  charity  during  a  certain  period,  or  has  been 
convicted  of  a  crime.  Receipt  of  an  old  age  pension,  moreover,  does 
not  impose  civil  disabilities.  It  is  probable  also,  that  there  are 
not  such  frequent  reinvestigations  of  the  financial  condition  of  the 
recipient  of  old  age  pensions,  although  reinvestigations  are  made 
if  suspicion  is  entertained  that  the  pensioner  possesses  a  larger 
income  than  was  originally  claimed.  The  recipient  of  poor  relief, 
however,  may  be  deprived  of  his  dole  if  there  are  relatives  who 
should  be  charged  with  his  support.  This  cannot  happen  to  a 
pensioner. 

About  the  same  principles  are  applied  in  all  other  countries 
which  have  adopted  the  old  age  pension  system.  Because  of  the 
fact  that  almost  all  the  funds  are  raised  by  taxing  the  more  pros- 
perous and  are,  therefore,  only  very  indirectly  contributed,  if  at 
all,  by  persons  likely  to  become  pensioners,  and  because  pensions 
are  paid  only  to  aged  indigent  persons,  it  is  hardly  to  be  considered 
a  system  of  workingmen's  insurance,  even  when  the  term  is 
stretched  to  its  utmost  meaning. 

It  is  not  unlikely  that  a  scheme  such  as  this,  where  there 
is  no  connection  whatever  between  the  contributions  and 
benefits  to  be  received,  would  discourage  habits  of  thrift  and 
providence,  encourage  idleness,  and  weaken  the  sense  of  respon- 
sibility. To  what  extent  this  has  been  the  case,  if  true,  cannot  yet 
be  determined.  The  language  of  the  various  laws  betrays  the  ex- 
pectation of  the  legislators  that  such  results  would  follow.  At 
least  they  assume  that  some  persons  about  to  reach  the  age  at 

300 


OLD    AGE    ANNUITIES   AND    PENSIONS 

which  the  pension  could  be  claimed  might,  in  case  their  income 
from  other  sources  was  small,  seek  to  conceal  their  property  or 
even  to  transfer  it  to  relatives  in  order  to  become  entitled  to  the 
pension.  The  administration  of  old  age  pension  laws  has  shown 
that  such  fears  were  not  groundless. 

What  insidious  effect  such  a  system  may  have  upon  the 
disposition  to  save,  extending  even  to  the  youngest  ages,  can  only 
be  guessed.  While  there  may  not  be  strong  realization  among 
working  people  of  the  necessity  for  providing  for  old  age,  the  accu- 
mulation of  large  funds  in  savings  banks  and  other  savings  insti- 
tutions shows  the  development  of  the  thrift  sense.  Probably 
habits  of  thrift  are  matters  of  heredity,  of  natural  disposition  and 
early  training.  The  strongest  incentive  to  save,  aside  from  this 
natural  disposition,  is  perhaps  found  in  the  desire  to  acquire  the 
conveniences  and  advantages  which  come  from  owning  property 
and  to  provide  for  and  educate  children.  It  cannot  be  questioned 
that  a  very  strong  motive  to  providence  and  economy  disappears 
when  there  is  no  longer  an  incentive  to  save  money  in  order  to 
avoid  becoming  an  object  of  charity  in  old  age. 

In  Denmark,  where  the  old  age  pension  system,  admittedly 
as  an  extension  of  outdoor  relief,  has  been  in  use  for  a  considerable 
period,  as  well  as  in  New  Zealand  and  Australia,  where  the  same 
has  been  the  case,  no  such  painstaking  investigation  has  been 
made,  or  perhaps  is  possible,  as  would  definitely  determine  the 
question.  In  Denmark,  as  in  the  other  countries  mentioned, 
thrift  has,  nevertheless,  constantly  increased,  as  is  evidenced  by 
deposits  in  savings  banks  and  similar  institutions.  It  would  be 
dangerous,  notwithstanding,  to  conclude  that  the  increase  would 
not  have  been  greater,  had  the  additional  incentive  to  save  for  old 
age  been  present.  In  England  and  France,  the  system  has  been  too 
recently  inaugurated  to  enable  any  definite  conclusions  to  be 
arrived  at,  except  that  the  cost  to  the  state  for  old  age  pensions  is 
rapidly  increasing.  The  results  of  the  experiments  in  the  first 
country  point,  however,  to  the  development  of  a  compulsory,  con- 
tributive  insurance  in  regard  to  invalidity  before  the  age  of  sev- 
enty; and  France  has  already  supplemented  her  pension  law  with  a 
contributory  system  after  the  German  model  which  applies  to  all 
wage-earners.  This,  as  has  been  said,  will  greatly  relieve  the 

301 


INSURANCE    AGAINST    INVALIDITY    AND   OLD    AGE 

pressure  from  the  old  age  pensioners.*  A  well-defined  fear  is 
found  to  exist  in  England  among  those  who  are  managing  the 
friendly  societies,  which  furnish  among  other  benefits,  old  age  an- 
nuities, that  the  granting  of  pensions  by  the  state  on  a  non- 
contributory  basis  will  greatly  diminish  the  incentive  to  join  these 
societies.  This,  they  say,  would  thereby  discourage  not  only 
saving  for  old  age,  but  also  efforts  to  provide  protection  against 
sickness  and  invalidity,  and  burial  benefits.  Representatives  of 
one  of  the  largest  affiliated  orders  stated  that  the  Old  Age  Pension 
Law  would  sound  the  death  knell  of  the  friendly  societies  in  Great 
Britain. 

The  argument  usually  advanced,  by  those  who  consider  that 
the  non-contributory  system  of  old  age  pensions  is  justifiable,  is  as 
follows:  The  right  of  a  man  to  be  sustained  during  sickness, 
whether  caused  by  accident  or  disease,  and  during  infirmity,  or 
permanent  total  or  partial  disablement,  depends  primarily  upon 
his  having  paid  a  fully  equivalent  consideration  for  it  to  an  insur- 
ance fund.  He  should  not  be  entitled  to  benefit  unless  he  makes 
these  contributions,  the  two  being  united  as  cause  and  effect.  In 
such  case  there  is  the  constant  incentive  to  make  the  payments, 
since  the  exigency  may  arise  at  any  moment  which  will  change  a 
contributor  into  a  participant  in  the  benefits.  Provision  for  old  age 
is  different,  because  the  right  of  old  people,  in  view  of  the  certainty 
of  the  incapacity  of  old  age,  is  based  upon  services  rendered  in 
the  past  and  upon  contributions  of  the  most  varied  character  to 
all  forms  of  social  and  community  prosperity.  In  other  words, 
a  benefit  of  this  character,  which  under  a  voluntary  insurance 
system  at  least  can  only  be  supplied  by  means  of  the  accumula- 
tion of  funds  through  long  periods,  should  not  be  subject  to  defeat 
by  any  contingency  whatever,  except  criminal  conduct  or  pauper- 
ization, but  should  be  secured  by  the  mere  fact  of  survival.  The 
idea  is  that  the  pension  is  a  deferred  and  contingent  additional 
compensation  for  past  services,  like  the  service  pensions  granted 
by  employers. 

In  countries  in  which  this  system  has  been  introduced,  there 
is  apparently  little  complaint  against  it  on  the  part  of  the  pub- 
lic. This  is  doubtless  due  to  the  fact  that,  for  the  most  part,  it 

*  See  page  285. 
302 


OLD    AGE     ANNUITIES     AND     PENSIONS 

is  merely  a  shifting  of  a  burden  from  one  form  to  another,  the 
burden  being  the  support  of  the  aged  indigent,  which  is  not  neg- 
lected in  any  civilized  country,  and  the  change  of  form  being  from 
relief  called  charity  to  relief  called  pensions.  There  is  doubtless 
some  added  cost,  and  likewise  a  disposition  in  the  community, 
after  the  cost  has  been  counted,  to  consider  that  the  additional 
expense  is  justified  by  the  benefits.  The  main  reason  for  the  pop- 
ularity of  this  system,  however,  it  is  believed,  is  its  compre- 
hensiveness and  its  immediate  availability;  it  applies  to  all  de- 
serving persons  who  are  old  and  in  want  and  it  applies  at  once, 
whereas  the  only  insurance  system  with  which  it  has  competed 
fulfills  neither  of  these  requirements. 

It  is  not  impossible,  however,  that  if  the  fourth  method  of 
insurance  described  above  were  adopted  and  the  surplus  contri- 
butions were  devoted  in  the  early  years  to  caring  for  those  already 
old,  instead  of  being  accumulated,  it  might  achieve  these  desirable 
ends  and  be  subject  to  none  of  the  perils  of  the  pension  system.  It 
would  have  the  advantage  that  each  young  contributor,  while  by 
no  means  accumulating  a  fund  for  his  own  old  age,  would  be 
paying  a  proper  financial  "consideration"  for  his  future  support. 
If  this  is  done,  it  is  perhaps  of  little  importance  to  what  use 
the  state  devotes  the  money,  provided  the  security  paid  for  is 
guaranteed.  Compulsion,  if  persisted  in,  may  assure  the  payment 
of  the  annuity  as  certainly  as  would  a  reserve. 

It  would  not  be  proper  to  close  this  discussion  of  the  sub- 
ject without  adding  that  in  all  the  chief  countries  of  Europe  some 
system  of  service  pensions  has  been  introduced  by  the  government 
in  connection  with  all  or  most  of  its  civil  service  employes.  It 
preceded  the  laws  for  old  age  pensions,  and  was  based  upon  the 
theory  that  the  employer  in  this  manner  would  secure  the  best, 
most  faithful  and  most  reliable  service,  that  it  was  profitable 
and  wise  to  defer  some  part  of  the  consideration  for  labor  per- 
formed, to  be  paid  in  this  manner  instead  of  in  current  wages ;  and 
that  by  paying  such  pensions,  employes  who  by  reason  of  age  and 
incapacity  are  not  able  to  give  full  service,  can  be  dismissed  with- 
out complaining  of  unfair  treatment. 


303 


XIII 
PENSIONS  TO   WIDOWS  AND  ORPHANS 

IN  Great  Britain,  about  150  years  ago,  or  soon  after  it  was 
found  practical  to  furnish  life  insurance  at  all,  there  was 
a  rage  for  the  organization  of  societies  to  provide  benefits 
for  widows,  payable  periodically  during  their  widowhood  and 
purchased  by  contributions  made  by  their  husbands  while  alive. 
This  was  a  peculiarly  insidious  form  of  assessment  insur- 
ance. At  first  the  cost  was  almost  nothing,  because  a  society 
would  run  for  several  months,  or  even  for  a  year,  without  having 
any  deaths  whatever.  If  a  few  deaths  occurred,  the  cost  was 
still  exceedingly  light,  as  only  enough  was  collected  from  members 
to  pay  the  pensions  then  falling  due.  The  expense,  however,  stead- 
ily increased  and  in  a  young  society  was  being  constantly  shifted 
to  the  shoulders  of  those  who  came  in  later.  The  first  members, 
it  is  plain,  paid  nothing  like  a  fair  equivalent  for  the  insurance 
which  was  provided,  taking  into  account  the  length  of  time  dur- 
ing which  the  benefits  might  have  to  be  furnished  their  widows. 
On  the  other  hand,  those  who  came  in  later  paid  much  more  than 
the  fair  equivalent,  most  of  their  contributions  being  absorbed 
to  pay  pensions  to  widows  of  former  members.  The  matter 
might  not  have  become  crucial,  had  it  not  been  that  because 
of  insufficient  reserves,  members  were  not  securing  reliable 
protection  for  their  widows,  the  sole  assurance  of  perma- 
nency depending  upon  a  constant  influx  of  new  members.  As 
young  men  preferred  to  join  societies  just  starting  at  a  lower 
temporary  cost,  the  older  societies  languished  and  died  and  the 
new  societies,  growing  old  in  turn,  repeated  the  same  history  of 
false  hopes  and  bitter  disappointments. 

The  spread  and  popularity  of  this  form  of  insurance,  with 
its  deceptive  cheapness  of  cost,  caused  the  writing  of  a  series  of 

304 


PENSIONS   TO   WIDOWS    AND   ORPHANS 

essays  which  made  Dr.  Richard  Price  famous  a  century  and  a 
half  ago  and  resulted  in  the  construction  of  the  Northamp- 
ton mortality  table  and  in  the  discovery  and  elucidation  of 
the  principles  of  valuation. 

The  very  first  work  which  Dr.  Price  accomplished  was 
to  demonstrate  the  fundamental  unsoundness  and  misleading 
nature  of  these  plans  of  insurance,  and  that  their  uniformly  dis- 
astrous career  was  not  an  accident  but  the  natural  consequence 
of  the  faults  of  the  plan.  This  he  did  so  conclusively  that  the  sup- 
port of  philanthropic  persons,  such  as  the  clergy  and  the  country 
gentry,  which  had  previously  been  accorded  these  organizations, 
was  largely  withdrawn.  A  powerful  impetus  was  given  to  legis- 
lation which  resulted  later  in  the  Friendly  Societies  Act,  providing 
for  valuation  and  registration  of  such  societies. 

Notwithstanding  this  exposure  in  Great  Britain,  the  widows' 
pension  notion  has  been  recently  brought  forward  by  a  large 
mercantile  house  in  London  through  a  sort  of  "trading  stamp" 
pension  scheme,  in  connection  with  the  sale  of  tea,  and  its  un- 
soundness on  the  assessment  or  on  any  similar  plan  has  been  dem- 
onstrated anew  in  practice.  It  has  also  been  revived  occasionally 
in  the  United  States.  Here,  some  ten  or  fifteen  years  ago,  the 
scheme  was  attempted  in  Georgia  and  was  followed  by  incursions 
into  surrounding  states,  and  the  establishment  of  several  societies 
more  recently  in  Illinois,  the  latest  of  which  has  just  succumbed. 
There  have  been  similar  attempts  in  other  countries.  In  most  of 
them,  at  the  present  time,  the  law  discourages  or  even  prohibits 
such  forms  of  insurance,  except  in  connection  with  the  purchase 
of  annuities  from  the  government  or  upon  plans  which  offer 
assurance  of  permanency  based  on  adequate  rates  and  valuation. 

In  nearly  all  countries  attempts  have  been  made  to  pop- 
ularize "survivorship  annuities"  as  they  are  known,  in  connection 
with  the  regular  insurance  companies.  These  annuities  are  not 
made  payable  merely  during  the  widowhood  but  also  during  the 
entire  after  lifetime  of  the  widow.  That  is  to  say,  they  are  not 
terminable  upon  her  re-marriage.  While  such  annuities  have 
been  sold  everywhere  they  have  had  no  great  development  except 
in  Denmark  where  the  "Statsanstalt  for  Livsforsikring, "  already 
referred  to,  has  transacted  a  phenomenally  large  business.  Even 
20  F  305 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

in  Denmark,  while  the  amount  of  business  is  large,  so  that  it 
has  been  possible  to  investigate  with  much  success  the  mortality 
among  surviving  widows,  it  in  no  way  compares  with  the  volume 
of  life  insurance  in  force  in  that  country. 

In  France  and  Belgium,  where  a  large  business  in  widows' 
annuities  has  been  transacted  by  state  departments,  the  pro- 
portion of  these  annuities,  which  are  contingent  in  form,  is  also 
found  to  be  very  small,  although  perhaps  increasing  in  im- 
portance. These  are  likewise  not  dependent  upon  re-marriage. 

Mutual  friendly  societies,  organized  in  France  to  furnish 
annuities  by  means  of  deposits  with  the  government  to  be  applied 
to  their  purchase,  and,  in  Belgium,  to  purchase  annuities  directly 
from  the  government  at  a  material  reduction  from  the  usual  price 
of  the  same,  have  shown  that  no  marked  tendency  exists  to  pur- 
chase contingent  annuities.  The  experience  in  Sweden  is  much 
the  same. 

In  all  these  countries  the  purchase  of  "last  survivor"  annuities 
is  not  infrequent.  This  annuity,  paid  for  not  by  current  premiums 
during  the  lifetime  of  the  husband,  but  usually  by  a  single  pre- 
mium, and  made  payable  to  the  husband  and  wife,  furnishes  an 
income  from  the  moment  of  purchase  until  the  last  survivor 
dies.  Both  of  these  forms  of  annuities  are  sold  likewise  by  stock 
companies.  In  most  countries  these  latter  have  been  able  to 
compete  on  favorable  terms  with  government  departments,  even 
though  the  latter  possess  the  advantage  of  having  their  expenses 
defrayed  out  of  general  taxes.  Private  companies  cannot  com- 
pete where  higher  rates  of  interest  than  can  safely  be  realized  on 
investments  are  guaranteed  by  the  government,  or  where  some 
other  method  of  direct  subvention  is  employed.  This  is  rarely 
done  except  as  a  special  feature  available  for  workingmen  only, 
and  is  introduced  in  order  to  make  annuities  attractive  to  them. 

The  establishment  funds  or  societies  composed  of  the 
employes  of  a  particular  firm  or  company  very  frequently  provide 
for  survivorship  annuities.  This  is  true,  likewise,  of  societies 
formed  among  the  employes  of  different  firms  or  companies 
engaged  in  the  same  general  lines  of  business,  such  as,  for  instance, 
banks  or  insurance  companies.  Among  the  clergy  of  certain 
churches,  widows'  funds  have  been  established  for  the  direct 

306 


PENSIONS   TO   WIDOWS   AND   ORPHANS 

purpose  of  furnishing  a  pension  during  widowhood.  Originally 
these  funds  were  without  any  actuarial  or  sound  financial  basis, 
and,  notwithstanding  large  contributions  made  to  them  by  em- 
ployers or  others  interested  in  maintaining  them,  independent 
of  the  contributions  of  members,  many  failed  and  others  were 
compelled,  as  a  result  of  bitter  experience,  to  reduce  their  bene- 
fits. In  recent  years,  however,  many  of  them  have  been  valued, 
and  contributions  and  benefits  readjusted  upon  a  business  basis. 

A  provision  for  the  protection  of  widows  is  usually  found 
in  connection  with  pension  or  establishment  funds.  These  are 
primarily  formed  for  the  purpose  of  securing  to  members  old 
age  retirement,  or  invalidity  pensions,  or  both.  It  is  but  na- 
tural, however,  that  when  such  societies  are  organized,  there 
should  soon  be  a  tendency  to  amplify  the  plans  and  purposes  so 
as  to  include  protection  for  the  widows  of  members  similar  to 
that  which  has  been  secured  for  members  themselves.  While 
many  of  these  funds  also  were,  or  still  are,  upon  an  unsound 
basis,  they  have  submitted  in  recent  years  to  re-valuation  and  to 
the  introduction  of  improved  business  methods.  Especially 
is  it  the  case  where  these  establishment  funds  cover  benefits 
during  disability  and  are  utilized,  as  in  Great  Britain,  to  provide 
compensation  insurance  under  the  workmen's  compensation  acts, 
that  periodical  valuation  and  adequacy  of  rates  are  enforced  by 
statute. 

With  the  exception  of  the  occasional  requirement,  in  con- 
nection with  establishment  funds,  that  all  employes  are  expected 
to  continue  members  of  such  funds,  none  of  the  foregoing  has 
reference  to  obligatory  insurance  plans.  It  is  obvious  at  the 
outset,  that  the  same  principles  in  regard  to  solvency  do  not 
necessarily  apply  where  membership  is  obligatory.  Thus, 
where  all  the  young  and  healthy  workingmen  are  required  to 
become  members,  and  where,  as  rapidly  as  they  reach  a  certain 
minimum  age,  all  those  of  future  generations  are  required  in 
turn  to  become  members,  the  peril  which  attended  the  assess- 
ment plan  is  neutralized  by  the  compulsion.  Under  such  an 
obligatory  system  it  is  no  longer  possible  for  members  to  leave 
the  society  except  by  abandoning  the  ranks  of  wage-earners 
altogether,  or  for  them  to  remain  outside  except  by  failing  to 

307 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

become  wage-earners.  Therefore,  when  the  number  of  widows 
drawing  pensions  has  once  reached  the  proportion  normal  to  the 
general  population,  and  a  reasonably  stable  equilibrium  of  cost 
been  realized  thereby,  each  member  will  be  paying  on  the  whole 
his  fair  proportion  thereof,  and  securing  for  the  consideration 
of  this  payment  the  absolute  protection  to  which  he  is  entitled. 

This  is  true,  likewise,  even  though  the  contribution  be 
levied  upon  unmarried  as  well  as  upon  married  men, — in  other 
words,  even  though  it  be  levied  upon  the  entire  working  popula- 
tion,— for  the  reason  that  in  such  case  the  combined  probabilities 
of  marriage  and  death  and  leaving  a  widow  would  enter  into 
and  reduce  the  cost.  By  ascertaining  and  charging  the  fair 
average  rate  for  each  age  from  the  start,  it  would  be  possible 
to  set  up  reserves  precisely  as  would  be  the  case  under  a 
voluntary  system,  including  the  full  capitalized  value  of  all  widows' 
pensions  from  the  moment  they  become  payable.  This  would 
have  the  disadvantage,  however,  that  it  would  be  necessary 
to  charge  the  present  generation  as  many  different  rates  as 
there  are  ages;  it  would  also,  perhaps,  by  its  heterogeneous 
nature,  introduce  the  question  as  to  why  unmarried  persons 
should  contribute  at  all,  and  it  would  render  the  administration 
so  complex  and  complicated  that  it  would  inevitably  be  uneco- 
nomical. 

After  the  present  generation  had  passed  away,  the  net 
result  would  be  that  all,  having  been  admitted  at  the  youngest 
age,  would  theoretically  be  paying  the  same  rate.  Practically, 
there  might  still  be  a  considerable  variety  of  rates  of  premiums  due 
to  some  workingmen  entering  the  ranks  of  wage-earners  at  higher 
ages  than  others.  Under  such  a  system  this  minimum  premium 
for  the  earliest  age  would,  by  reason  of  the  assumption  that  reserves 
will  be  established  and  maintained  and  that  they  will  earn  interest, 
be  lower  than  the  ultimate  assessment  rate  under  the  plan  pre- 
viously described,  after  it  reaches  its  equilibrium.  If  under  a 
compulsory  system,  this  full  assessment  rate  were  charged  all 
the  present  generation,  the  society  instead  of  having  in  hand 
only  enough  from  year  to  year  to  meet  the  requirements  in  bene- 
fits to  widows  of  members  who  had  themselves  contributed, 
would  possess  for  the  time  a  considerable  surplus,  the  amount 

308 


PENSIONS   TO   WIDOWS    AND   ORPHANS 

of  excess  contributions,  however,  steadily  diminishing  as  the 
period  approached  when  the  equilibrium  of  assessments  would  be 
reached.  The  amount  of  surplus  so  accumulated  would  not, 
however,  be  equal  to  the  aggregate  reserves  created,  were  every 
member  charged  the  proper  level  rate  for  his  age  at  the  time  he 
became  a  member,  and  if  capitalized  values  for  all  annuities  were 
set  up  immediately  upon  the  death  of  the  husband.  It  is 
obvious  upon  considering  the  nature  of  this  system  that  if 
from  the  beginning  a  rate  is  charged  which  under  the  assess- 
ment plan  is  reached  when  the  assessment  attains  its  equilib- 
rium, there  will  be  enough  income  from  the  moment  of  the  intro- 
duction of  the  compulsory  system  to  enable  similar  annuities  to 
be  supplied  immediately  to  the  widows  of  the  workingmen  already 
dead,  who  have  not  contributed  but  would  have  done  so  had  a 
similar  scheme  been  in  force  when  they  were  living. 

This  method,  which  would  be  much  like  the  granting  of 
old  age  pensions  in  Denmark,  Belgium,  France,  New  Zealand, 
Australia  and  Great  Britain,  would  have  the  advantage  that  it 
would  from  the  very  introduction  of  the  plan  provide  for  de- 
pendent widows.  Its  apparent  disadvantage,  that  it  is  giving  the 
benefits  of  insurance  where  none  were  paid  for,  is  in  fact,  not 
different  in  principle  from  furnishing  benefits  after  the  assessment 
rate  has  reached  its  equilibrium  to  widows  of  members  who  pre- 
viously had  not  fully  paid  the  fair  value  of  the  protection  thus 
guaranteed,  but  who  have  escaped  part  of  it  through  an  increas- 
ing system  of  assessments  covering  only  the  annuity  payments  fall- 
ing due  in  the  current  year.  In  equity  it  differs  only  in  degree 
from  the  conditions  obtaining  in  the  cases  of  those  members  who, 
when  the  widows'  pension  system  goes  into  effect,  are  ailing  or 
aged  and  reasonably  certain  in  a  short  time  to  be  dead.  In  other 
words,  the  assessment  system  is  fundamentally  inequitable  until 
the  equilibrium  has  been  fully  attained. 

What  disposal  is  made  of  the  assessments  levied  if  no 
member  is  paying  more  than  the  fair  equivalent  in  value  of  the 
benefits  of  his  insurance,  may  be  considered  as  follows:  Ought 
the  surplus  payments  made  by  him  to  be  reserved  for  his  own 
protection?  The  answer  to  this,  under  a  voluntary  system,  is 
"Yes";  if  this  is  not  done  his  protection  will  probably  prove 

309 


INSURANCE   AGAINST   INVALIDITY   AND  OLD   AGE 

to  be  delusive.  Under  a  compulsory  system  the  answer  is  not 
necessarily  "Yes."  If,  by  reason  of  the  compulsion,  the  certainty 
of  receiving  the  benefits  which  he  is  paying  for  is  attained,  he  is 
only  concerned  with  what  disposal  is  made  of  his  surplus  pay- 
ments, because  of  reductions  in  the  cost  which  might  result  from 
investing  them  and  applying  the  interest  to  reduce  his  payments. 

It  is  now  proposed*  by  the  German  government  to  extend 
its  system  of  obligatory  insurance  to  the  protection  of  widows 
and  orphans,  benefits  to  be  paid  to  the  widow  only  during  her 
widowhood  and  in  case  her  income  from  property  or  otherwise  is 
less  than  a  certain  sum,  and  to  be  paid  to  orphans  only  until  their 
fifteenth  year.  Under  this  system,  it  is  proposed  that  half 
the  cost  in  excess  of  the  government  subvention  be  charged 
to  employers  and  half  to  workingmen.  Contributions  are 
to  be  required  from  every  wage-earner,  whether  married  or 
single,  male  or  female,  the  idea  being  that,  as  to  unmar- 
ried men,  the  contribution  provides  for  a  surviving  widow  or  chil- 
dren in  the  event  of  future  marriage.  As  to  unmarried  women, 
they  can  well  afford  to  make  contributions,  in  view  of  the  fact 
that  these  benefits  will  be  directly  payable  to  them  and  to  their 
children,  if  they  marry  and  bear  children.  Of  course,  the  chief 
consideration  which  moves  the  government  to  levy  contributions 
upon  all  of  these  mentioned  is  that  it  lessens  the  cost  to  each  and 
makes  it  more  endurable;  and,  undoubtedly,  the  chief  secondary 
consideration  is  that  it  simplifies  the  method  of  administration, 
the  charge  being  uniform  upon  all  instead  of  varying  in  amount, 
and  certain  classes  being  exempted  from  payment. 

It  is  significant  that,  notwithstanding  that  contributions 
from  the  husband  are  to  be  compulsory,  benefits  are  not  to  be 
paid  when  the  widow  from  any  source  enjoys  an  income  beyond  a 
certain  amount.  This  system  has  considerable  similarity,  there- 
fore, to  poor  relief.  But  it  is  argued  that  the  measure  of  com- 
pulsory or  obligatory  insurance  should  be  what  is  equitably  re- 
quired, upon  the  sound  theory  that  it  is  the  duty  of  the  state  and 
its  citizens  to  provide  against  the  destruction  or  pauperization 
of  families,  and  that  when  this  duty  has  been  performed  there  is 
no  further  call  for  the  imposition  of  a  larger  tax  upon  its  citizens. 

*See  Reform  Project  in  Germany,  page  406. 
310 


PENSIONS   TO   WIDOWS   AND   ORPHANS 

It  is  also  pointed  out  that,  by  reason  of  this  limitation, 
the  cost  to  each  is  greatly  reduced  and  that  the  contributions 
are  fair,  taking  into  account  all  the  chances;  for  a  member  is 
really  paying  the  cost  of  protection  against  the  combined  hazard 
of  marriage  and  in  case  of  death  of  leaving  a  widow  or  orphans  or 
both,  the  widow  not  being  in  the  enjoyment  of  an  income  of  more 
than  a  given  amount.  It  is,  obviously,  quite  as  possible  to  have 
a  rate  of  premium  covering  these  combined  probabilities  which  is 
fair  on  the  whole,  as  to  have  a  larger  rate  of  premium  covering 
some  of  them  only,  such  a  one  for  instance  as  would  prevail  if 
the  condition  as  to  maximum  income  from  other  sources  were 
omitted. 

It  is  common  under  all  systems  of  widows'  pensions,  where 
the  latter  is  to  stop  upon  re-marriage,  to  provide  some  special 
benefit  payable  at  the  time  of  re-marriage,  both  as  a  compensa- 
tion for  the  loss  of  the  pension,  and  also  chiefly  as  a  special  induce- 
ment thus  to  relieve  the  fund.  This  special  benefit  is  frequently 
fixed  at  from  one  to  three  years'  annuities,  paid  in  one  lump  sum 
at  the  time  of  re-marriage. 

In  connection  with  widows'  pensions  a  considerable  body  of 
statistics  has  been  accumulated  concerning  the  rates  of  remarriage, 
which  latter  appears  to  depend  upon  the  age  of  the  widow  and 
the  duration  of  her  widowhood.  Such  tables  have  been  com- 
piled in  Great  Britain,  from  the  records  of  widows'  funds  and 
from  other  sources.  A  great  variation  is  found  in  the  rates  of 
re-marriage  among  widows  whose  husbands  were  of  different 
classes,  as  for  instance,  clergymen,  bank  clerks,  railway  employes, 
civil  service  employes,  etc.  There  is  abundant  evidence  that  it 
is  considerably  less  when  the  widow  is  in  receipt  of  a  pension, 
as  then  no  financial  necessity  exists  for  her  re-marriage,  but  rather 
the  contrary,  since  she  suffers  a  distinct  financial  loss  if  she  does. 

Three  sorts  of  moral  hazard  must  be  looked  out  for  when 
widows'  pensions  are  provided  on  a  voluntary  system: 

First,  the  moral  hazard  that  an  old  member,  soon  to  die, 
may  marry  a  young  and  healthy  widow,  either  with  the  direct 
purpose  of  providing  her  with  a  pension  or  because  he  has  been 
inveigled  into  such  a  marriage  without  a  clear  appreciation  of 
what  it  signifies. 

3" 


INSURANCE    AGAINST   INVALIDITY   AND   OLD    AGE 

Second,  that  investigation  should  be  made,  not  merely 
of  the  health  of  the  member  but  also  of  the  age  and  health  of 
his  wife  and  the  number  of  children  already  in  existence,  since 
need  exists  for  discrimination  in  rates  with  direct  relation  to  these 
matters. 

Third,  that  in  event  of  second  marriage,  that  is,  the  re- 
marriage of  the  husband  if  the  wife  who  was  living  at  the  time 
he  insured,  or  whom  he  married  after  being  insured,  shall  have 
died,  it  is  usually  wise  either  to  provide  for  a  readjustment  of 
the  rate  or  to  have  the  insurance  cease  entirely  upon  the  death 
of  the  first  wife,  requiring  a  new  application  and  re-rating  if  the 
member  desires  to  insure  again. 

Of  course  none  of  these  need  be  specially  provided  for 
when  the  insurance  is  obligatory;  and  it  is  fortunate  that  it  is 
not  then  necessary  because  it  would  not  be  practicable  to  exer- 
cise such  discrimination,  without  so  increasing  the  expense  of 
administration  that  the  economy  of  the  obligatory  system  would 
to  a  large  degree  be  lost. 


312 


XIV 

INSURANCE  AGAINST   INVALIDITY   AND  OLD   AGE 
IN  VARIOUS   COUNTRIES 

GREAT  BRITAIN 

VARIOUS  plans  to  provide  old  age  pensions  have  from  time 
to  time  occupied  the  attention  of  British  statesmen  for  at 
least  a  century.  As  early  as  1833  a  department  for  the  sale 
of  government  annuities  was  established,  in  the  National  Debt 
Office,  the  maximum  amount  upon  any  one  life  being  £20  (197.40) 
per  annum,  later  increased  to  ^100  ($487).  In  1864,  also,  the  Pos- 
tal Savings  Bank  undertook  to  furnish  annuities  up  to  £100- 
The  results  of  these  attempts  have  not  been  encouraging  so 
far  as  solving  the  general  problem;  in  the  25  years  between  1865 
and  1890,  only  21 ,000  such  annuities  were  written  and  these  chiefly 
to  persons  of  the  middle  class. 

In  addition  to  the  government  agencies,  there  have  been 
the  regular  life  insurance  companies,  and  as  has  been  noticed  in  a 
previous  chapter,  some  friendly  societies  in  which  deferred  an- 
nuities might  be  purchased.  At  best,  however,  but  a  small  pro- 
portion of  workingmen  have  been  protected  in  this  manner.  To 
them,  old  age  after  a  life  of  toil  has  brought  only  dependence 
and  perhaps  pauper  relief.  Accordingly,  when  the  German  law 
of  1884  went  into  effect,  attention  in  Great  Britain  was  turned 
to  this  branch  of  workingmen's  insurance,  and  in  the  following 
year  a  parliamentary  commission  was  appointed  to  inquire  into  it. 
Two  years  later,  the  commission  reported  that  administra- 
tive difficulties  were  too  great  to  be  overcome,  and  proposed  that 
the  government  drop  the  question  of  compulsory  insurance  against 
old  age.  In  spite  of  this  rebuff  those  in  favor  of  old  age  pensions 
continued  to  keep  the  question  alive.  Their  suggestions  took  three 
distinct  forms:  (i)  the  establishment  of  compulsory  contributions 
to  a  fund  for  old  age  pensions;  (2)  voluntary  insurance  encour- 
aged by  government  subsidy;  (3)  a  combined  pension,  sickness, 


INSURANCE   AGAINST   INVALIDITY   AND   OLD   AGE 

and  invalidity  government  department  to  be  supported  by  tax- 
ation. Mr.  Charles  Booth,  the  eminent  sociologist,  was  greatly 
interested  in  this  movement.  He  suggested  that  every  man,  rich 
and  poor  alike,  should  receive  from  the  age  of  sixty-five  until  his 
death,  a  pension  from  the  government  of  five  shillings  ($1.20)  a 
week.  According  to  his  calculation  the  annual  cost  would  be 
^24,500,000  ($i  19,315,000),  which  should  be  raised  by  an  addition 
to  the  income  tax. 

A  second  commission  was  appointed  by  Gladstone  in  1893. 
The  results  were  negative.  Other  attempts  were  made,  from  time 
to  time,  but  nothing  was  accomplished  until  1900  when  a  depart- 
mental commission  made  proposals  which  later  became  law.  It 
was  estimated  that  in  1907  there  would  be  665,000  persons  eli- 
gible to  pensions  on  this  basis  which  would  call  for  expenditure 
of  ;£i 0,300,000  ($50,161,000)  per  annum. 

In  May,  1907,  a  bill  was  introduced  providing  that  from 
January,  1908,  every  wage-earner  over  seventy-five  years  of  age 
should  receive  five  shillings  ($1.20)  a  week,  the  age  limit  to  descend 
to  seventy  in  1909  and  sixty-five  in  1910,  the  government  to  pay 
nine-tenths  and  workingmen  to  contribute  one-tenth  of  the  neces- 
sary amount.  Chancellor  of  the  Exchequer  Asquith  in  1907  recom- 
mended that  the  surplus  of  every  year's  budget  should  be  put  into 
a  fund  until  it  reached  ^10,000,000  ($48,700,000)  to  set  old  age 
pensions  going.  Early  in  1908,  Mr.  Asquith,  who  in  the  mean- 
time had  become  premier,  brought  in  a  bill  which  changed  some 
parts  of  his  previous  proposal  and  provided  for  the  granting  of 
pensions  that  year.  This  bill  was  introduced  into  the  House  of 
Commons  July,  1908,  and  was  passed  by  the  overwhelming  vote 
of  417  to  29.  It  thus  became  a  national  and  not  a  partisan  meas- 
ure. It  later  passed  the  House  of  Lords  and  became  a  law. 

The  scheme  is  non-contributory.  It  provides  that  all  over 
seventy  years  of  age  who  have  been  British  subjects  for  at  least 
20  years,  have  not  received  poor  relief  and  have  done  what  they 
could  to  support  their  families,  are  entitled  to  pensions.  Persons 
who  have  been  in  prison  during  the  preceding  ten  years  are  not 
eligible;  nor  are  those  whose  annual  incomes  exceed  ^31  IDS. 
($153.41).  Should  any  person  deprive  himself  of  income  or 
property  in  order  to  qualify,  the  income  or  property  so  disposed 

314 


NORWAY 

of  shall  be  taken  as  still  his  own.    Fraud  of  any  kind  is  punish- 
able with  severe  penalties,  and  few  loop-holes  are  left. 

Pensions  are  paid  out  of  funds  raised  by  general  taxation, 
no  contributions  on  the  part  of  workingmen  being  required.  Sums 
received  vary  with  the  income  of  the  pensioner,  the  aggregate  of 
his  income  and  his  pension  not  to  exceed  13  shillings  ($3.12) 
a  week.  The  following  table  illustrates  amounts  allowed  under 
the  various  conditions. 

TABLE    112. — AMOUNTS    ALLOWED   UNDER  OLD   AGE    PENSION     ACT, 

GREAT    BRITAIN 


With  Annual  Income 

Weekly  Pension 
(Shillings) 

Not  exceeding  ^21        
From  £21  to  £23  125.  6d  
From  ^23  I2S.  6d.  to  ^26^5.     . 
From  £26  55.  to  £28  175.  od.      . 
From  ^28  175.  6d.  to  ^31  los. 
Exceeding  ^31  los  

5 
4 
3 

2 
I 

No  pension  allowed 

The  method  of  administration  is  of  interest.  The  central 
authority  is  the  Local  Government  Board,  all  pension  officers  being 
appointed  by  the  Treasury.  A  local  pension  committee,  however, 
is  appointed  by  the  council  of  the  district  or  county  for  every 
borough  and  urban  district.  Claims  are  adjudicated  by  the  local 
pension  committee  and  appointed  pension  officers;  but  there  is  a 
right  of  appeal  to  the  central  authority.  Pensions  are  paid  weekly 
in  advance  and  are  inalienable  and  non-assignable,  exempt  from 
being  taken  in  bankruptcy  or  under  execution.  It  was  estimated 
that  572,000  persons  would  be  in  receipt  of  state  pensions  in  the 
financial  year  1908-9,  and  that  the  cost  for  the  year  would  be 
^7,500,000  ($36,525,000). 

NORWAY 

It  will  be  recalled  that  the  Norwegian  Commission  of  1907* 
among  its  various  duties  had  to  report  on  a  plan  for  old  age  pen- 
sions. This  part  of  its  report  has  not  as  yet  been  enacted  into 
law.  The  scheme  recommended  is  compulsory  for  all  individuals 

*See  page  184. 
315 


INSURANCE    AGAINST    INVALIDITY    AND   OLD    AGE 

irrespective  of  income,  the  pension  to  begin  at  the  age  of  seventy. 
The  cost  would  fall  upon  the  communes,  the  state,  and  the  insured, 
the  employer  bearing  no  part.  Contributions  of  women  would 
be  paid  by  those  upon  whom  they  depend.  By  contributing 
to  the  pension  fund,  communes  would  be  relieved  in  part  of 
their  poor  rates,  and  so  very  likely  be  more  careful  in  investigating 
cases  of  distress.  The  state  would  be  expected  to  bear  the  expense 
of  management.  To  meet  this  expenditure,  the  government,  for 
a  number  of  years,  has  been  laying  aside  part  of  the  excise  tax. 
This  fund  now  amounts  to  14,500,000  crowns  ($3,915,000). 

The  plan  is  to  collect  premiums  from  the  insured  through  the 
communes,  together  with  the  taxes.  Oneof  the  most  influential  mem- 
bers of  the  commission,  however,  is  in  favor  of  collecting  through  the 
employer  by  means  of  a  stamp  system  and  deductions  from  wages. 
In  this  way  the  employe  would  be  more  impressed  with  the  fact 
of  his  being  insured  and  would  be  encouraged  in  his  sense  of  thrift. 

There  already  exists  in  Norway  what  is  known  as  the  "  Enke- 
kasse"  or  Widow's  Fund.  This  is  an  old  state  institution  for  grant- 
ing pensions  to  the  widows  of  state  officials  including  all  branches 
of  the  civil  and  military  service,  as  well  as  retirement  pensions 
for  these  officers  themselves.  In  1906  this  fund  had  assets  of 
nearly  18,000,000  crowns  ($4,860,000).  For  the  years  1903-06 
there  was  an  average  yearly  income  of  1,120,923  crowns  ($302,649) 
and  an  average  disbursement  of  656,306  crowns  ($177,203)  for 
pensions  and  life  insurance;  49,200  crowns  ($13,284)  for  adminis- 
tration expenses;  35 1, 888  crowns  ($95,000)  added  to  the  reserve  and 
an  annual  increase  of  funds  of  298,828  crowns  ($80,684)  •  According 
to  the  old  law,  it  was  customary  for  all  office  holders  to  purchase 
an  annuity  for  their  brides  at  the  time  of  marriage.  These  could  be 
bought  outright  or  through  yearly  premiums.  The  machinery  of 
this  institution,  however,  is  entirely  too  antiquated,  and  is  being 
replaced  by  more  recent  legislative  measures. 

A  municipal  system,  also,  exists  for  city  employes.  This 
grants  retirement  pensions  at  the  age  of  sixty-five,  and,  in  case 
of  earlier  death,  gives  pensions  to  widows.  Employes  leaving 
the  service  are  entitled  to  return  of  their  contributions  without 
interest.  Compulsory  sickness  insurance  is  connected  with  the  plan ; 
employes  must  contribute  one-fourth,  the  city,  three-fourths. 

316 


SWEDEN 

SWEDEN 

Though  legislation  for  invalidity  and  old  age  insurance  was 
among  the  first  to  receive  attention  in  Sweden,  there  is  as  yet 
no  state  provision  in  that  country  for  this  form  of  protection.  The 
first  effort  in  this  direction  was  the  appointment  of  the  commission 
of  1884  already  referred  to.*  In  1889,  this  body  presented  a  bill 
for  obligatory  old  age  insurance  for  the  entire  people.  Contribu- 
tions on  the  part  of  the  insured  were  to  be  compulsory  and  sub- 
sidies were  to  be  given  by  both  the  commune  and  the  state. 
The  measure  failed. 

The  bill  presented  by  the  later  commission  of  1891  was  more 
ambitious.  It  provided  that  all  workmen  who  became  permanently 
incapacitated  by  sickness,  accident  or  old  age,  and  all  who  reached 
the  age  of  seventy,  whether  disabled  or  not,  should  receive  support. 
Employers  and  employes  were  both  to  contribute.  If  a  workingman 
on  account  of  unemployment  was  unable  to  make  contributions 
the  state  would  advance  them.  It  was  also  expected  that  the 
state  would  otherwise  make  a  large  contribution.  Minor  legiti- 
mate children  of  the  pensioner  were,  after  his  death,  to  receive 
benefits  until  their  fifteenth  year,  and  the  widow  during  her 
widowhood.  This  bill  also  failed  to  become  a  law. 

In  1898,  an  amended  bill  was  submitted,  which  was  re- 
jected by  the  Upper  House.  The  proposals  were  not  so  comprehen- 
sive as  those  in  the  former  bills,  but  the  invalidity  principle  was  still 
adhered  to.  Compulsory  contribution  ended  at  the  age  of  fifty; 
the  pension  began  at  sixty-five  but  in  no  event  before  fifty. 
Married  women  were  insured  by  the  mere  fact  that  their  husbands 
were.  Employers  were  not  to  contribute  and  no  provision  was 
made  for  pensions  to  minor  children.  Payment  of  premiums  was 
to  be  made  through  postal  savings  banks,  and  of  benefits  through 
a  pension  administration  bureau  operating  throughout  the  king- 
dom. This  bill,  likewise,  failed  to  pass;  and  others,  introduced  on 
private  initiative,  met  the  same  fate. 

At  the  present  time,  a  commission  composed  of  some  of 
the  leading  and  most  public-spirited  statesmen  in  the  kingdom,  are 
engaged  in  working  out  a  system  for  invalidity  and  old  age  pen- 

*  See  page  5 1 . 
317 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

sions.  They  are  considering  two  plans.  First,  one  providing  for 
workingmen  only,  as  in  Germany;  and  second,  one  providing  for 
the  entire  population,  as  in  England  and  Australia;  the  calcula- 
tions are  being  based  on  the  German  experience,  modified  by  cer- 
tain Swedish  statistics.  The  government  for  several  years  has  been 
accumulating  a  fund,  which  in  1907  amounted  to  about  21,000,000 
crowns  (15,670,000),  as  a  basis  for  launching  a  comprehensive 
scheme  of  state  pensions.  This  appears  to  promise  a  contributory 
plan,  financed  so  as  to  pay  pensions  immediately  to  those  already 
aged  or  prematurely  disabled,  benefits  being  provided  for  others 
from  insurance  premiums  paid  by  themselves. 

DENMARK 

Denmark  has  had  a  thorough-going  old  age  pension  system 
for  many  years.  From  the  time  of  the  earliest  workingmen's 
insurance  commission,  various  recommendations  for  pensions  had 
been  presented.  In  April,  1891,  a  law  was  passed  providing 
that  every  person  over  sixty  years  of  age,  whose  income  was  not 
more  than  a  certain  sum,  and  who  for  a  period  of  ten  years  had 
not  received  poor  relief,  should  be  entitled  to  a  pension.  By  the 
law  of  March,  1908,  this  period  was  changed  to  five  years.  The 
amount  of  the  pension  is  determined  by  communal  authorities,  the 
commune  and  the  state  each  contributing  one-half.  It  differs 
from  poor  relief  in  that  certain  disqualifications  are  not  incurred 
by  receiving  the  pension.  There  is  a  recognized  right  to  the 
sum,  instead  of  a  mere  claim  for  charity.  In  the  year  1905- 
1906,  the  average  pension  paid  was  152  crowns  ($41)  per  person; 
and  the  aggregate  was  7,600,000  crowns  ($2,052,000)  which  was 
distributed  among  approximately  50,000  people.  The  system  is 
supported  by  general  taxation. 

It  is  the  general  opinion  in  Denmark  that  independence, 
thrift  and  self-reliance,  have  not  been  impaired  by  this  measure, 
but  that,  on  the  contrary,  Danish  workingmen  are  less  pauper- 
ized, more  self-reliant  and  more  thrifty  than  heretofore.  These 
statements  are  supported  by  statistics  of  savings  banks.  The 
social  democracy,  which  constantly  opposes  the  government,  ac- 
knowledges that  pauperism  has  been  reduced  three-fourths  in 
Denmark  since  this  law  went  into  effect.  Pensioners  are  sharply 

318 


DENMARK    AND   HOLLAND 

distinguished  from  paupers,  and  are  not  deprived  of  any  privilege 
of  citizenship.  Free  medicine  and  medical  or  hospital  treatment 
given  by  the  commune  are  no  longer  obstacles  to  receiving  a  pen- 
sion under  this  act. 

The  authorities,  however,  have  never  felt  entirely  satisfied 
with  their  system  of  invalidity  insurance,  and  a  commission,  in- 
cluding the  most  distinguished  actuaries  of  Denmark,  has  for 
some  time  been  studying  the  question.  Their  report,  which  has 
appeared,  offers  alternative  methods ;  one  based  upon  the  accumu- 
lation of  such  a  fund  to  maintain  benefits  as  would  be  necessary 
under  a  voluntary  system,  and  the  other  based  upon  collections 
sufficient  to  pay  claims,  contributions  being  obligatory.  If  the 
former  is  adopted,  persons  now  invalids  or  who  become  invalids 
within  a  short  time,  will  be  excluded  from  the  benefits,  unless 
a  subsidy  is  given  by  the  state  to  provide  for  them.  It  is  not 
probable  that  such  a  subvention  will  be  granted,  even  if  the  plan 
is  adopted. 

HOLLAND 

There  is,  at  present,  no  state  provision  for  either  old  age  or 
invalidity  insurance  in  Holland.  Yet  for  nearly  twenty  years 
this  matter  has  been  under  continuous  discussion.  Government 
commissions  have  been  appointed  and  bills  presented,  but  changes 
of  ministry  and  other  political  conditions  of  the  country  have 
obstructed  the  passage  of  each  of  these  measures.  The  latest  pro- 
posal, presented  to  the  Staten  Generaal,  in  October,  1907,  is  still 
under  consideration. 

This  is  primarily  a  plan  for  old  age  and  widows'  insurance, 
invalidity  being  left  for  later  legislation.  Under  its  provisions 
workingmen  and  workingwomen  with  yearly  wages  up  to  1000 
guilders  ($400),  must  insure  from  their  sixteenth  year.  Small 
employers  of  similar  income  have  the  right  to  insure  at  their 
option.  Pensions  and  contributions  vary  with  the  five  salary 
classes  of  the  members.  As  in  the  German  and  Austrian  systems, 
the  amount  of  pension  in  each  class  consists  of  a  basic  sum  and 
an  additional  bonus  depending  upon  the  total  amount  of  weekly 
premiums  paid.  The  minimum  old  age  pension  is  to  be  104  guil- 
ders ($41.60).  It  begins  with  the  sixty-fifth  year  of  the  insured 

319 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

after  a  waiting  period  of  1248  contributory  weeks.  During  periods 
of  invalidity  no  premiums  are  required,  and  these  weeks  count  in 
the  waiting  period. 

Workingmen  obliged  to  insure  who  shall  have  attained  their 
forty-seventh  year  when  this  measure  goes  into  effect,  will  have  a 
right  to  the  minimum  pension  at  the  completion  of  their  seventieth 
year,  provided  they  make  payment  of  47  premiums  yearly.  Those 
who  have  already  reached  their  seventieth  year  will  receive  the 
minimum  pension,  provided  they  have  been  insurable  on  this 
basis  during  the  preceding  five  years.  In  both  the  above  cases 
the  annuity  is  reduced  to  78  guilders  ($31.20)  if  both  man  and 
wife  make  claim.  At  the  completion  of  her  sixty-fifth  year, 
the  widow  of  an  insured  has  a  right  to  an  annuity  of  104  guilders 
($41.60).  Contributions  are  not  expected  to  cover  all  disburse- 
ments. The  state  will,  therefore,  during  the  first  75  years  of  the 
existence  of  this  fund  make  a  yearly  contribution  of  6,400,000 
guilders  ($2,560,000),  of  which  550,000  guilders  ($220,000)  shall  be 
for  management  expenses.  Premiums  of  those  obligatorily  insured 
are  to  be  paid  by  the  employers,  who  are  permitted  to  reim- 
burse themselves  up  to  one-half  the  sum  from  the  wages  of  the 
insured.  This  measure  is  not  meeting  with  much  favor.  It  is  im- 
possible, however,  at  the  present  time,  to  foresee  what  fate  it  will 
meet  at  the  hands  of  the  legislators. 

BELGIUM 

It  is  in  the  domain  of  old  age  and  invalidity  insurance  that 
the  Belgian  government  has  accomplished  most  for  workingmen. 
A  state  annuity  department,  the  so-called  "Caisse  Generate  d' 
Epargne  et  de  Retraite"  was  founded  on  the  basis  of  a  law  passed 
in  1850.  Its  powers  were  extended  in  1865  and  by  the  later  laws 
of  1900  and  1903.  Into  this  department  every  person  over  eigh- 
teen years  of  age  may  make  payments  for  himself  or  others,  either 
through  the  agency  of  tax  collectors  or  the  government  postal 
savings  bank,  and  may  thus  become  insured  for  an  immediate 
or  a  deferred  life  annuity,  the  latter  with  or  without  return  of 
the  principal  paid.  Since  1869,  the  maximum  annuity  has  been  set 
at  1 200  francs  ($240)  per  annum,  the  amount  varying  with  the  age 
when  the  first  payment  is  made.  The  deferred  annuity  may  begin 

320 


BELGIUM 

at  any  time  between  the  fifty-fifth  and  sixty-fifth  year.  In  case 
of  earlier  incapacity,  the  purchaser  of  a  deferred  annuity  may, 
if  his  condition  requires  relief,  surrender  for  a  smaller  immediate 
amount.  In  case  of  incapacity  through  industrial  accident,  he 
also  receives  a  fixed  annual  sum,  provided  he  has  been  making 
payments  for  at  least  five  years.  At  the  death  of  the  insured 
before  or  after  the  annuity  begins,  if  it  was  bought  on  the  return 
premium  principle,  the  amount  contributed  (less  annuities  already 
received)  is  paid  to  the  lawful  heir. 

Of  special  interest  is  the  co-operation  existing  between 
some  of  the  friendly  societies  and  the  state  life  insurance  and 
annuity  department.  To  encourage  this  as  well  as  sickness 
insurance,  the  government  has  made  large  subventions  to  assist 
members  of  friendly  societies  to  purchase  annuities  from  the  state. 
Workmen  thus  receive  the  benefits  of  these  societies  while  at  the 
same  time  the  government  is  provided  with  an  inexpensive  and 
convenient  method  of  collecting  premiums.  The  eifect  of  this 
arrangement  was  the  formation  of  hundreds  of  friendly  societies, 
many  of  which,  however,  give  absolutely  no  service  other  than 
the  privilege  of  paying  for  old  age  annuities  on  easy  terms,  the 
government  contributing  a  part  of  the  cost. 

The  law  of  1900,  with  the  amendments  of  1903,  firmly 
established  the  state  subvention,  which  until  then  had  been  granted 
by  special  appropriations  from  year  to  year,  and  substantially  in- 
creased the  amount.  The  state  subscription  now  amounts  to  60 
per  cent  of  the  contributions,  up  to  15  francs  ($3.00)  per  annum 
of  the  insured,  and  may  thus  reach  a  maximum  of  nine  francs 
($2.25)  per  annum  provided  the  entire  annuity  purchased  does 
not  exceed  360  francs  ($72).  To  persons  who  had  already  reached 
the  age  of  forty  on  the  first  of  January,  1900,  a  subvention  corre- 
sponding to  a  yearly  contribution  of  24  francs  ($4.80)  maximum, 
was  guaranteed;  and  the  sum  of  65  francs  ($13)  per  annum  was 
granted  to  all  Belgian  workingmen  who  on  January  i,  1901,  had 
reached  the  age  of  sixty-five  and  were  in  need. 

To  meet  these  expenditures,  the  government  provides  in  its 
budget  for  an  appropriation  of  15,000,000  francs  (!j>3, 000,000)  an- 
nually, to  which  must  be  added  the  bonuses  that  the  provinces  and 
a  number  of  communities  grant.  In  addition,  many  employers 

21  F  321 


INSURANCE    AGAINST   INVALIDITY   AND  OLD   AGE 

have  made  the  insurance  of  their  workmen  in  this  fund  obligatory, 
and  have  also  founded  mutual  aid  societies  to  which  they  pay 
contributions  varying  from  50  to  100  per  cent  of  the  premiums 
paid  by  the  workmen.  Such  help  from  employers,  however,  is 
exceptional. 

Table  1 13  shows  the  growth  of  the  state  annuities  fund,  1890 
to  1906. 

TABLE    I  13. NUMBER  AND  AMOUNT  OF  DEPOSITS    AND    AMOUNT   OF 

ANNUITIES   IN   STATE  ANNUITY  FUND,    1890-1906 


Year 

Number  of 
Deposits 

Amount  of  De- 
posits 

Existing  Ac- 
counts in 
Round  Numbers 

Amount  of 
Annuities  in 
Million  Francs 

(Francs') 

1890 

18,567 

916,21  1.04 

10,200 

8.0 

1900 

856,116 

5,121,056.02 

301,400 

31.0 

1902 

1,810,402 

9,900,404.21 

521,000 

49.0 

"904 

i  ,99  1  ,  1  1  6 

1  1,823,401.44 

709,000 

7.  .8 

1906 

2,224,727 

13,706,894.47 

858,000 

IOO.O 

In  addition  to  the  above  a  compulsory  pension  system  for 
miners  has  existed  since  1868  under  the  form  of  benefit  associations 
to  which  employers,  workmen,  state  and  province  contribute. 
Pensions  are  paid  to  the  disabled  after  a  service  of  30  to  35  years 
and  to  widows  and  orphans  of  members.  A  commission  decides 
disputes  at  a  minimum  of  expense. 


FRANCE 

Provision  for  old  age  by  means  of  compulsory  insurance  has 
until  today  been  in  operation  in  France  only  among  seamen  and 
miners.  A  comprehensive  measure,  however,  requiring  all  wage- 
earners  to  insure  against  old  age,  as  has  been  noted,  passed  both 
houses  of  Parliament  in  1910  and  is  now  law.  We  will  therefore 
consider  here  only  the  voluntary  agencies  for  old  age  annuities. 
These  constitute  the  most  widely  developed  form  of  providence 
practiced  by  the  population  of  this  country.  Private  insurance 
companies  write  many  such  policies;  friendly  societies  with  the  help 
of  the  government  do  much  more  and  the  latter  also  sells  annuities 
directly.  The  most  important  agencies  are  those  of  the  state,  con- 
sisting of  two  departments,  the  Caisse  des  Depots  et  Consignations 

322 


FRANCE 

and  the  Caisse  Nationale  des  Retraites  pour  la  Vieillesse.  The  first 
is,  in  reality,  a  great  national  bank  and  encourages  friendly  societies, 
by  giving  subsidies  and  by  paying  a  high  rate  of  interest  on  their 
deposits.  The  second  is  an  insurance  department  which,  at  low 
rates  of  premium,  sells  both  immediate  and  deferred  life  annuities. 

Of  these  agencies,  the  Caisse  des  Depots,  established  April  26, 
1856,  acts  as  banker  for  various  funds  deposited  in  the  custody  of 
the  state.  It  is  here  that  moneys  are  deposited  by  friendly  societies, 
establishment  funds,  and  postal  savings  banks;  all  payments,  in 
addition,  such  as  the  government's  subventions  to  the  various 
societies,  are  made  through  this  Caisse.  Interest  at  the  rate  of  4^ 
per  cent  is  allowed  on  funds  deposited  by  friendly  societies.  As 
this  is  higher  than  the  rate  actually  realized,  the  difference  is  made 
up  each  year  by  a  special  appropriation  in  the  budget.  Money  accu- 
mulated in  the  Caisse  des  Depots  may  be  withdrawn  and  annuities 
purchased  therewith  from  the  Caisse  Nationale  des  Retraites  pour 
la  Vieillesse.  This  latter  fund  carries  on  the  life  annuity  business 
of  the  state.  It  was  originally  established  by  the  law  of  June, 
1850;  but,  as  it  exists  at  present,  its  operations  are  based  on  the 
law  of  July  20,  1886.  Before  this  date,  the  loss  to  the  treasury  had 
become  so  large,  because  of  the  high  rate  of  interest  allowed  in  com- 
puting annuities  (5  per  cent),  that  the  entire  reorganization  of  the 
Caisse  Nationale  des  Retraites  became  necessary. 

Sums  may  be  paid  into  this  department  and  there  accumulate 
at  compound  interest.  The  accumulation  is  used  to  pay  for  an  an- 
nuity at  any  age  over  fifty  agreed  upon  when  the  account  was 
opened.  When  the  annuity  becomes  due,  the  recipient  may,  under 
certain  conditions,  leave  the  money  for  a  further  term  of  years  in 
order  to  purchase  a  larger  annuity.  The  annuity  may  be  either  a 
simple  one  terminating  at  death,  or  if  preferred,  subject  to 
the  provision  that  the  actual  sum  paid  into  the  Caisse  (less  an- 
nuities already  received)  should,  at  the  death  of  the  annuitant,  be 
paid  to  his  representative.  In  the  former  case,  the  annuity  is  said 
to  be  "capital  aliene"  (principal  not  returnable),  and  in  the  latter, 
"capital  reserve"  (principal  returnable).  Each  subscriber  is  pro- 
vided with  a  book  in  which  are  inscribed  the  payments  made  by  him, 
and  the  total  annuity  from  the  agreed  age  to  which  all  payments  to 
date  entitle  him.  The  maximum  annuity  which  can  be  purchased 

323 


INSURANCE   AGAINST   INVALIDITY   AND  OLD   AGE 

is  fixed  at  1,200  francs  (1240).  The  smallest  payment  receivable 
by  the  Caisse  is  one  franc  and  the  maximum  per  annum,  500  francs 
(| i oo).  This  does  not  apply  to  payments  made  (i)  in  accordance 
with  a  judicial  decision,  (2)  by  public  departments  on  behalf  of  their 
employes,  (3)  by  friendly  societies  out  of  members'  contributions. 
The  rate  of  interest  allowed  upon  payments  and  by  which  annuities 
are  computed  was  fixed  by  the  law  of  1886  at  4  per  cent.  It  was 
lowered  in  January,  1892,  to  3$  percent,  and  is  now  fixed  annually 
by  decree.  The  reduction  resulted  in  a  yearly  decrease  in  pay- 
ments made  by  individuals,  until  in  1894  they  were  less  than  50 
per  cent  of  those  made  in  1891.  Since  1894,  the  number  of  an- 
nuity accounts  opened  has  again  increased,  the  interest  allowed 
by  the  Caisse  being  still  in  excess  of  that  obtainable  by  invest- 
ment in  government  securities. 

Deposits  by  individuals  are,  however,  only  a  small  fraction 
of  the  whole,  the  bulk  being  made  through  intermediaries.  Among 
these  are  friendly  societies,  mine  owners  (separately  referred  to 
later),  nearly  all  the  principal  railway  and  street  car  companies, 
many  private  employers  and  public  authorities  on  behalf  of  their 
employes.  The  use  of  the  Caisse  by  such  intermediaries  has  pro- 
gressed continuously  since  1886,  and  in  their  case  no  reduction  is 
directly  traceable  to  the  diminution  of  interest  above  referred  to. 

The  following  figures  will  show  the  enormous  transactions 
of  the  Caisse  Nationale  des  Retraites: 

TABLE     114. — NUMBER    AND    AMOUNT    OF     DEPOSITS    AND    AMOUNT 

OF     RESERVES    IN    THE    CAISSE    NATIONALE    DES 

RETRAITES,    1884-1906 


Year 

Number  of 
Deposits 

Amount  0}  Deposits 
\           (Francs') 

Reserves 
(Francs) 

1884 
1894 

IQOO 
1906 

597.438 
1,041,720 
2,797,004 
4,247,344 

37-736,710 
31,045.337 
SS,745-298 
88,753,182 

546,292,860 
766,140,993 
904,469,711 
1,263,995,423 

In  1906,  these  immense  sums  represented  1,687,592  different 
old  age  annuity  accounts  of  which  39,596  were  individual,  1,272,721 
collective  (establishment  fund  and  government),  and  375,275, 
accounts  through  friendly  societies.  We  shall  discuss  each  of  these 

324 


FRANCE 


types  of  accounts  separately.  The  first  represents  voluntary  per- 
sonal old  age  annuity  accounts  opened  directly  by  private  persons. 
In  very  few  cases  do  these  belong  to  workmen;  the  large  majority 
are  from  men  of  considerable  means,  as  the  following  distribution 
of  deposits  by  amounts  per  account  will  show. 


TABLE   115. —  INDIVIDUAL    DEPOSITS    ACCORDING     TO    SIZE    IN 
CAISSE  NATIONALS  DES   RETRAITES,    1906. 


THE 


Si%e  of  Account 

Number 
of  Ac- 

Per cent 

Amount  of 
Deposits 

Average  deposit 
per  account 

counts 

(Francs') 

(Francs') 

Less  than  10  Francs 

5.378 

.3.58 

20,790 

3.86 

10-49  Francs  . 

8,203 

20.72 

185,311 

22.59 

50-199  Francs 

8,568 

21.64 

789,097 

92.09 

200-499  Francs 

4-867 

12.29 

1,381,374 

283.82 

500  Francs 

12,518 

31.61 

6,259,000 

500.00 

Regular  payments  of  more 

i 

than  500  Francs 

8 

26,640 

3,330.00 

Irregular  (over  500  Francs) 

54 

0.14 

33,006 

6l  1.22 

Total    . 

39.596 

IOO.OO 

8,695,218 

219.35 

The  1,272,721  collective  accounts  represent  various  estab- 
lishment funds  and  government  departments.  Contributions  by 
employers  are  sometimes  embraced  in  these  deposits.  Table  1 1 6 
on  the  following  page  shows  in  detail  the  activities  included  under 
this  head. 

Of  the  above  accounts  those  of  school  children  are,  in  spite 
of  their  recent  establishment,  the  most  numerous.  Thus,  62.37 
per  cent  of  the  depositors  represented  were  between  the  ages  of 
three  and  nineteen  years.  The  age  period  twenty  to  twenty-five 
is  also  largely  represented,  the  percentage  for  that  period  being 
21.13.  The  two  periods  together  thus  account  for  83.50  per  cent 
of  the  total  number  of  depositors. 

In  contrast  with  the  foregoing  only  30.38  percent  of  those 
making  direct  deposits  to  the  Caisse  fall  in  the  age  period  between 
three  and  nineteen  years.  The  other  periods  are  represented  as 
follows:  twenty  to  twenty-nine  years,  26.37  Per  cent;  thirty  to 
thirty-nine  years,  20.77  Per  cent>  forty  to  forty-nine  years,  10.33 

325 


INSURANCE   AGAINST   INVALIDITY   AND  OLD   AGE 

per  cent;  fifty  to  sixty-five  years,  10.55  Per  cent>  anc^  over  sixty- 
five  years  1.6  per  cent. 


TABLE    I  1 6. — COLLECTIVE  DEPOSITS  IN  THE  CAISSE  NATIONALS  DES 

RETRAITES,     1906 


Accounts 

Number 
of  Ac- 

Per cent 

Amount  of 
Deposits 

Average  amount 
per  account 

counts 

(Francs) 

(Francs') 

School  funds 

399.653 

31.40 

1.797.399 

4-49 

Miners    and    officials     of 

mines. 

283,802 

22.30 

9,182,389 

32-35 

Railroad  workers. 

237.478 

1  8.66 

1  8,  1  17,966 

76.20 

Cantonniers         (roadway 

workers)     . 

93.025 

7-3' 

2,114,437 

22-73 

Soldiers 

54.255 

4.26 

3.852,198 

71.00 

Workers  for   departments 

and  communes 

49.  «36 

3.86 

2,494,266 

50.76 

Various    industries  (wood 

printing,  clothing,  etc.) 

33.988 

2.67 

2,380,205 

70.03 

Aid    societies    (individual 

books)      and     savings 

funds. 

25.791 

2.03 

660,448 

25.60 

Street     railway    workers, 

seamen,  etc.     . 

25.557 

2.OI 

i  ,730,678 

67.71 

Metal  workers 

23.779 

1.87 

'.349.073 

56-73 

Public   works,    telegraph, 

etc  

19,009 

1.49 

982,892 

51.70 

Bank  and   administrative 

treasurers  . 

'4-35° 

I.I3 

904,45  1 

63.03 

Soldiers  and  marines   . 

7.750 

0.61 

30.924 

3-99 

Various 

1,298 

o.  10 

29,337 

22.60 

Total  of  ordinary  collective 
deposits 

1,268,871 

99.70 

45,626,663 

35-97 

Various    additional    state 

accounts    . 

3,850 

.30 

1.353.304 

35'-5' 

Grand  Total    .  . 

1,272,721 

IOO.OO 

46,979,967 

36.91 

Finally,  there'  are  375,275  special  accounts  through  mutual 
aid  societies.  Since  the  decree  of  1856,  both  forms  of  societies 
can  deposit  funds  with  the  government  savings  bank  to  be  used  in 
purchasing  annuities  for  members  upon  or  after  attaining  the  age 
of  fifty  and  after  membership  of  at  least  10  years.  It  was  the 
purpose  of  the  decree  of  1856  to  encourage  the  purchase  of  old 

326 


FRANCE 

age  annuities  from  the  state  and  to  make  these  more  accessible 
by  the  granting  of  government  subsidy.  Accordingly,  the  interest 
of  a  grant  of  10,000,000  francs  ($2,000,000)  amounting  to  200,000 
francs  ($40,000)  annually,  was  turned  over  for  the  support  of 
societies  which  pledged  themselves  thus  to  deposit  a  certain 
portion  of  their  reserves  for  the  purchase  of  old  age  annuities. 

The  law  now  requires  the  rules  of  the  society  to  specify 
the  amount  of  the  annuity  to  which  a  member  is  entitled,  and  the 
age  at  which  it  becomes  payable.  To  be  entitled  to  an  annuity 
a  member  must  have  paid  contributions  for  at  least  15  years, 
instead  of  10,  as  formerly.  Every  five  years,  at  least,  the  society 
must  lay  before  the  Minister  of  the  Interior  an  account  of  its 
pension  liabilities,  and  if  necessary,  it  may  be  called  upon  to 
modify  its  rules. 

With  regard  to  the  subvention  by  the  state,  the  new  law 
provides  that  the  revenues  of  the  Friendly  Society  Endowment 
Fund,  as  well  as  the  annual  sums  voted  in  aid  of  friendly  soci- 
eties, shall  be  used  for  the  following  purposes:  (i)  To  encourage 
the  formation  of  old  age  annuity  funds  by  friendly  societies; 
(2)  to  supplement  annuities  beginning  after  January  i,  1895 
which,  with  the  sum  so  added,  amount  to  less  than  360  francs 
($72)  per  annum;  and  (3)  to  grant  subsidies,  varying  with  the 
number  of  their  members,  to  societies  not  already  providing  old 
age  annuities  as  an  encouragement  to  undertake  them.  A  sum 
not  exceeding  5  per  cent  of  the  total  amount  available  is  also  to  be 
set  aside  for  the  benefit  of  associations  which,  owing  to  epidemics 
or  other  causes  beyond  their  control,  may  be  temporarily  unable 
to  meet  their  obligations.  Organizations  which  grant  to  their 
members  daily  disability  benefits  exceeding  five  francs  or  annui- 
ties exceeding  360  francs  ($72)  are  to  be  excluded,  both  from  the 
state  subventions  and  from  the  benefit  of  the  special  rate  of 
interest  on  deposits  with  the  Caisse  des  Depots  et  Consignations. 

The  unit  premium  of  the  Caisse  is  one  franc.  Sums  paid  in 
are  allowed  to  accumulate  at  compound  interest  (3^  per  cent). 
As  might  be  expected,  a  marked  difference  exists  in  the  amount 
of  annuity  obtainable  by  the  two  plans  referred  to  above;  namely, 
principal  returnable  and  principal  not  returnable.  The  follow- 
ing table  of  the  rates  of  the  Caisse  shows  the  amount  of  the 

327 


INSURANCE   AGAINST   INVALIDITY   AND  OLD   AGE 


annuity  for  life  on  the  basis  of  an  annual  premium  of  one  franc 
upon  both  these  plans. 


TABLE    Iiy.  —  ANNUITIES   GRANTED   AT    DIFFERENT    AGES     FOR 
ANNUAL    PREMIUM   OF   ONE    FRANC,    CAISSE    NATIONALE 

DES     RETRAITES 
PRINCIPAL  NOT  RETURNABLE 


AN 


A  t*»      ->4 

AGE  AT  WHICH  ANNUITY  BEGINS 

Age  at 
Entry 

50  years 

53  years 

57  years 

60  years 

65  years 

(Francs) 

(Francs') 

(Francs') 

(Francs) 

(Francs) 

5 

10.0919 

12.8116 

18.0279 

23.8050 

40.1141 

10 

7.8970 

10.0874 

14.2732 

18.9089 

3  1  .995  1 

'5 

6.0991 

7-8332 

1  1.1665 

14.8577 

25.2771 

20 

4.6044 

5.9821 

8.6151 

1  1.5306 

19.7601 

25 

3.4001 

4.4807 

6-5457 

8.8321 

15.2854 

3° 

2.4259 

3.2661 

4.8717 

6.6492 

1  1.6657 

35 

1  .6364 

2.2818 

3-5  '49 

4.8800 

8.7319 

40 

0.9975 

1.4851 

2.4169 

3.4483 

6-3575 

45 

0.4827 

0.8434 

'•5325 

2.2949 

4.4450 

50 

0.0713 

0.3306 

0.8255 

1.3730 

2.9164 

Age  at 
Entry 

50  years 
(Francs) 

53  years 
(Francs) 

57  years 
(Francs) 

60  years 
(Francs) 

65  years 
(Francs) 

5 

7.2192 

9.1141 

1  2.7220 

16.7064 

27.9230 

10 

5.4883 

6.9560 

9-7475 

12.8275 

21.4908 

•5 

4.  1  042 

5.2304 

7.3691 

9-7259 

16.3476 

20 

3.0064 

3.86,7 

5.4828 

7.2661 

12.2687 

25 

2.1426 

2.7846 

3.9982 

5.3301 

9.0585 

3° 

1.4679 

i  .9434 

2.8388 

3.8181 

6.5513 

35 

0.9464 

1.2933 

1.9427 

2.6495 

4.6135 

40 

0.5490 

0.7980 

1.2598 

1.7591 

3.1370 

45 

0.2518 

0.2476 

0.7494 

1.0934 

2.0331 

50 

0.0352 

0.1577 

0-3773 

0.608  1 

1.2282 

Of  the  two  methods,  the  latter  (principal  returnable)  is  the 
more  popular.  This  is  not  only  true  with  individuals  but  is  be- 
coming so  with  societies  and  funds  as  well.  The  insured  thus 
voluntarily  gives  up  a  larger  pension  in  order  to  protect  his 
family  against  the  loss  of  his  savings  in  event  of  his  death,  all 

328    ' 


FRANCE 


that  he  has  paid  (less  annuities  received)  being  returned  to  his 
widow  or  representative.  Table  118  shows  the  remarkable 
increase  in  popularity  of  the  principal  returnable  plan  since  1896. 

TABLE    Il8. — DEPOSITS   UNDER  THE    PRINCIPAL    NOT    RETURNABLE 

AND  PRINCIPAL  RETURNABLE    PLANS,    CAISSE    NATIONALE 

DES    RETRAITES,    1851-1896,   1906 


Type  of  Deposit 

PRINCIPAL  NOT  RETURNABLE 

PRINCIPAL  RETURNABLE 

Million  francs 

Per  Cent 

Million  francs 

Per  Cent 

ndividual  payments 
1851-96 
1906 
Collective  deposit 
1851-96 
1906 

235.6 
•4 

297. 
3'-5 

47-5 
45-5 

69. 

281.7 
4-7 

52-5 
54-5 

3'- 

47-5 

TABLE    119. — NUMBER    AND      VALUE     OF     ANNUITIES     SINCE      1851 

AND   IN   FORCE   DECEMBER   31,    1906,    CAISSE   NATIONALE 

DES    RETRAITES 

SINCE   1851 


Annuity  Value 
(Francs) 

Annuitants 

Total  Value 
(Francs} 

Average  Value 
(Francs) 

2-      50 
51-    200 
201-    360 
361-   ooo 
601-1,200 
1,201-1,500 

246,520 
224,712 
46,032 

33-397 

22,212 
4,968 

8,523,723 
25,131,362 
1  2,720,783 
16,020,353 
19,065,978 
7,I33,750 

35 

I  12 
276 

858 
1,436 

Total 

577,84' 

88,595,949 

'53 

ON  DECEMBER  31,  1906 


Annuity  Value 

Annuitants 

Total  Value 

Average  Value 

(Francs) 

(Francs) 

(Francs) 

2-      50 

136,608 

5,144,008 

38 

51-    200 

112,628 

13,682,913 

121 

201-    360 

18,818 

5,525,687 

294 

36  1  -   600 
601-1,200 

10,369 
8,089 

5,187,138 
7,222,658 

5OO 
893 

1,201-1,500 

1,322 

1,889,386 

1,429 

Total 

287,834 

38,651,790 

•34 

329 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

Table  1 19,  on  the  preceding  page,  shows  the  number  of  an- 
nuitants since  the  founding  of  the  Caisse  and  the  number  at  the 
end  of  the  year  1906. 

At  the  beginning  of  1907  there  were  nearly  300,000  per- 
sons receiving  annuities  from  the  Caisse,  the  average  amount  of 
each  being  134  francs  ($26.80).  As  has  been  indicated,  a  large 
part  of  the  annuity  business  is  conducted  on  the  principal  return- 
able plan.  In  1900,  16,903,294  francs  ($3,380.659)  were  returned 
in  this  way.  In  1906,  the  amount  reached  17,322,288  francs 
($3,464,458)  paid  to  13,339  families,  the  average  amount  to  each 
family  in  1900  being  1,594  francs  ($318.80).  The  repayment 
of  the  capital  in  this  way  modifies  the  selfishness  of  old  age  insur- 
ance, and  in  a  country  where  life  insurance  is  not  popular,  is  of 
great  social  service. 

In  spite  of  the  wide  extension  of  old  age  annuities,  it  is 
somewhat  discouraging  to  observe  that  they  are  usually  so  small. 
Thus  the  average  annuity  in  1906  was  but  1 34  francs  ($26.80)  and 
47^  per  cent  were  less  than  50  francs  ($10).  In  view  of  this  fact  and 
to  improve  the  condition  of  the  most  impecunious  classes,  the 
government  has  come  forward  with  financial  assistance  for  the 
creation  of  special  old  age  annuities,  entirely  apart  from  the  subsi- 
dies granted  to  friendly  societies. 

The  law  of  July  20,  1886,  provided  that,  in  the  case  of  grave 
injuries  or  premature  infirmities  entailing  the  absolute  incapacity 
of  one  who  is  purchasing  an  annuity  in  the  Caisse,  such  annuity 
might  be  granted  before  the  age  originally  fixed  upon,  and  in- 
creased by  the  state  out  of  a  special  fund.  This  annuity,  however, 
plus  the  increment,  must  not  exceed  three  times  the  amount  of 
the  annuity  purchased  by  the  member's  then  accumulation  of 
payments,  or  the  sum  of  360  francs  ($72).  Up  to  the  close  of 
1896,  such  increments  were  granted  by  the  Caisse  in  15,648  cases, 
amounting  in  all  to  320,305  francs  ($64,061).  In  addition,  under 
the  law  of  December  31,  1895,  the  income  from  half  the  amount 
secured  by  the  sale  of  some  of  the  crown  jewels  was  set  aside  for 
this  purpose. 

A  more  important  advance  in  governmental  action  was  pro- 
vided by  this  law  of  December  31,  1895.  Under  it  persons  of 

330 


FRANCE 

seventy  years  of  age  and  upwards,  who  had  paid  contributions 
to  the  Caisse  or  had  subscribed  to  an  "approved"  friendly  society 
which  had  had  a  common  annuity  fund  for  a  specified  number  of 
years,  whether  consecutive  or  not  (16  years  in  1897,  17  in  1898, 
and  so  on  until  during  and  after  1905,  when  25  years  were  the 
number  required)  were  entitled  to  an  increment  to  their  annuities 
to  be  paid  by  the  state.  The  whole  annuity  with  the  increment 
was  not,  however,  to  exceed  360  francs.  A  subsequent  law,  July 
13,  1896,  limited  the  increment  to  a  fifth  of  the  annuity  purchased 
by  the  accumulations  of  payments.  The  law  of  December  31, 
1895,  also  provided  a  special  bonus  to  the  parents  of  more  than 
three  children ;  a  decree  of  the  Minister  of  Commerce,  December 
23,  1896,  fixed  this  bonus  at  16  per  cent  of  the  pension,  for  parents 
of  four  children,  and  4  per  cent  additional  for  each  additional 
child. 

The  greatest  and  most  revolutionary  advance  in  state  liber- 
ality, however,  was  made  by  the  law  of  July  19,  1905.  Under  it 
every  Frenchman  over  the  age  of  seventy,  as  well  as  all  those  who 
before  attaining  that  age  are  wholly  disabled  by  accident  or 
disease,  is  entitled  to  a  pension,  provided  he  is  not  already  in 
receipt  of  an  income  above  a  fixed  amount. 

That  the  measure  was  really  demanded  by  prevailing  condi- 
tions is  shown  by  the  large  amount  disbursed  under  it.  On  April 
i,  1908,  after  only  fifteen  months  of  operation,  there  were  no  less 
than  404,000  pensioners  under  this  law.  Of  these  60,000  received 
a  pension  of  from  60  to  108  francs  ($12  to  $21.60);  2 16,000  a  pen- 
sion of  120  to  228  francs  ($24  to  $45.60) ;  86,000  one  of  240  to  300 
francs  ($48  to  $60)  and  42,000  one  of  360  francs  ($72).  On  the 
average  the  sum  amounts  to  180  francs  ($36).  The  provision  of  this 
act  that  permits  benefits  to  be  paid  to  wholly  disabled  persons  under 
seventy  makes  it  more  favorable  than  the  old  age  pension  act  of 
Great  Britain.  Of  the  pensioners  so  far,  59.4  per  cent  were  seventy 
years  or  over,  while  no  less  than  40  per  cent  were  under  seventy 
and  totally  disabled.  The  cost  of  supplying  these  pensions  is 
shared  between  the  state,  the  departments,  and  the  communes. 
Thus  for  the  year  1907  the  total  expenditures  were  48,996,000 
francs  ($9,799,200),  of  which  27,643,000  francs  ($5.528,600)  fell 
on  the  state,  8,016,000  francs  ($1,603,200)  on  the  departments  and 


INSURANCE    AGAINST    INVALIDITY  AND    OLD   AGE 

13,337,000  francs  ($2,667,400)  on  the  communes.  It  is  known 
that  the  disbursements  during  1908  and  1909  were  larger. 
This  law  has,  contrary  to  all  expectation,  but  slightly  affected 
the  activities  of  friendly  societies;  it  seems  to  meet  the 
needs  of  an  entirely  different  group  of  people,  indicating  that  the 
purchase  of  old  age  annuities  had  never  reached  the  very  poor. 
Objections  have  been  brought  against  it  from  various  quarters, 
but,  according  to  the  opinion  of  those  in  charge,  it  appears  to 
have  served  a  useful  purpose. 

Miners  and  seamen  are  compelled  by  law  to  provide  for  old 
age.  Conditions  prevailing  in  these  two  fields  are  of  such  im- 
portance, that  it  will  be  well  to  take  each  up  separately. 

The  first  provision  with  regard  to  the  insurance  of  miners 
against  old  age,  was  made  under  the  law  of  June  29,  1894,  supple- 
mented by  two  later  decrees  of  the  same  year.  According  to  this 
law,  the  employer  is  bound  to  pay  every  month  either  into  the 
Caisse  Nationale  des  Retraites  pour  la  Vieillesse,  or  into  a  special 
establishment  fund,  a  sum  equal  to  4  per  cent  of  the  wages  of  his 
employes,  of  which  not  more  than  half  could  be  deducted  from 
the  wages  paid.  Employes  whose  wages  are  more  than  2,400 
francs  ($480)  per  annum,  receive  benefits  only  proportionate  to 
that  sum.  For  the  creation  of  a  special  fund,  whether  in  connec- 
tion with  a  single  firm  or  with  associations  of  employers,  legal  au- 
thorization must  be  obtained  in  the  form  of  an  administrative 
decree.  The  property  of  the  funds  can  be  invested  only  in  certain 
specified  securities,  which  have  been  approved  by  the  authorities, 
and  their  accounts  are  subject  to  inspection. 

Payments  into  the  Caisse  Nationale  des  Retraites  pour  la 
Vieillesse  made  in  accordance  with  the  above  law  are  treated  in  the 
same  way  as  all  other  payments  through  societies.  They  cease 
to  be  obligatory  at  the  age  of  fifty-five,  at  which  time  the  first 
payment  falls  due  unless  the  person  entitled  to  it  makes  a  request 
that  it  begin  later  so  that  it  may  be  larger.  Payments  are  made 
on  the  principal  not  returnable  plan,  although  the  portion 
deducted  from  wages  may  at  the  request  of  the  employe,  be  paid 
into  the  Caisse  on  the  principal  returnable  plan. 

To  remove  certain  injustices  under  this  law  and  to  improve 
conditions  in  the  mines  generally,  a  measure  was  passed  on 

332 


FRANCE 

March  31,  1903,  which  carries  with  it  a  yearly  state  subvention  of 
1,500,000  francs  ($3  ,000,000).  Of  this  sum,  one-third  is  used  to 
increase  annuities  which  began  before  January  i,  1903,  and  the 
remaining  two-thirds  is  for  payment  of  benefits  to  all  miners  not 
receiving  such  increase  who  on  July  i,  1903,  had  reached  the 
age  of  fifty-five  and  had  served  30  years  in  this  particular  field 
of  industry. 

The  number  of  miners  insured  through  the  Caisse  Nationale 
des  Retraites  pour  la  Vieillesse,  had  in  1906  reached  283,802. 
All  of  these  were  entered  like  other  industrial  workingmen  in- 
sured on  the  collective  plan.  By  a  recent  decree  the  widow  of  an 
annuitant  continues  to  receive  one-half  of  the  increase  granted 
by  the  state  to  the  annuity  received  by  her  husband. 

French  seamen,  as  a  class,  have  for  centuries  enjoyed  the 
special  protection  of  the  government.  As  far  back  as  1673  a 
fund  known  as  the  Caisse  des  Invalides  de  la  Marine  was  estab- 
lished for  the  benefit  of  aged  or  incapacitated  seamen.  Revenues 
were  composed  of  sums  deducted  from  seamen's  wages,  divi- 
dends on  government  securities  owned  by  the  Caisse  and  the  an- 
nual subventions  from  the  government.  This  interest  in  seamen 
is  not  difficult  to  understand.  Every  member  of  a  crew  on  a 
French  vessel  is  registered  and  for  the  first  seven  years  is  at 
the  call  of  the  Minister  of  Marine  for  service  in  the  navy. 

The  first  law  regulating  contributions  of  seamen  and  amounts 
of  annuities  was  passed  in  April,  1881.  It  granted  annuities 
to  those  who  had  reached  the  age  of  fifty  and  had  served  at  least 
300  months.  They  varied  between  204  and  384  francs  ($40.80  and 
$76.80)  for  sailors;  widows  and  orphans  received  one-half  the  sum 
the  deceased  enjoyed  or  would  have  received.  Contributions  of 
seamen  amounted  to  3  per  cent  of  their  salaries.  The  state  gave 
a  subvention,  but  the  ship  owners  contributed  nothing.  If  the 
seaman  died  before  300  months  of  service,  no  annuity  was  paid 
to  the  widow  or  orphans. 

This  law  was  unsatisfactory  and  in  May,  1907,  the  govern- 
ment presented  a  measure  which  went  further.  It  became  a  law 
in  July,  1908.  As  before,  the  French  sailor  receives  an  annuity 
from  his  fiftieth  year,  provided  he  has  completed  300  months' 
service.  If  he  becomes  incapacitated  before  this,  and  is  adjudged 

333 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

by  a  commission  unable  to  work,  a  smaller  pension  is  paid  if  he 
has  served  at  least  180  months,  of  which  100  were  in  the  merchant 
marine  or  in  the  fishing  industry. 

Annuities  granted  seamen  vary  from  a  minimum  of  360 
francs  ($72)  to  a  maximum  of  636  francs  ($127.20).  Captains 
and  officers  of  vessels  are  entitled  to  them  as  well  as  men,  con- 
tributions being  now  fixed  at  5  per  cent  of  the  pay.  Others,  such 
as  pilots,  certain  sailors  in  the  fisheries,  etc.,  pay  monthly  contri- 
butions which  vary  from  50  centimes  (ten  cents)  for  ship  boys  up 
to  seven  francs  ($1.40)  for  the  highest  officers.  Ship  owners  also 
contribute  an  amount  equal  to  three-fifths  of  the  whole  sum 
contributed  by  their  respective  crews.  Provision  was  made  for 
widows  and  orphans;  the  former  receive  290  francs  ($58)  yearly 
and  for  each  child  under  thirteen  an  additional  sum  of  four  francs 
(80  cents)  monthly.  When,  for  any  reason,  the  widow  is  not  en- 
titled to  an  annuity  under  the  law,  a  yearly  benefit  of  100  francs 
($20)  is  granted  to  her  if  her  husband  had  served  at  least  1 5  years. 
Sums  contributed  by  seamen  and  ship  owners  do  not  cover 
the  cost  of  these  annuities.  The  Caisse  Maritime  has  large 
funds  which  have  accumulated  for  centuries,  the  interest  upon 
which  amounts  to  3,150,000  francs  ($630,000)  per  annum.  The 
Caisse  also  maintains  homes,  hospitals,  schools  and  mutual  aid 
societies  for  seamen. 

In  spite  of  the  many  and  varied  agencies  for  old  age  and  inva- 
lidity insurance,  conditions  in  France  were  still  unsatisfactory. 
Only  a  small  fraction  of  the  working  population  was  insured.  Nor 
did  the  law  of  July  19,  1905,  with  its  increasing  cost  to  the  state 
and  its  limited  sphere  of  usefulness  entirely  relieve  the  situation. 
It  became  all  the  more  clear,  therefore,  to  those  who  studied  the 
matter  in  France,  that  voluntary  insurance  could  offer  no  perma- 
nent solution  to  the  problem  of  support  during  old  age  for  the 
great  body  of  the  people.  Public  opinion,  notwithstanding  French 
conservatism,  soon  came  to  the  same  conclusion. 

With  this  in  view,  the  House  of  Deputies  after  much  atten- 
tion to  the  subject,  prepared  a  measure  providing  for  compulsory 
old  age  insurance.  The  bill  passed  this  body  in  1906  and  was  sent 
to  the  Senate  for  ratification.  The  Senate,  however,  because  of 

334 


FRANCE 

the  immense  financial  burden  the  proposal  would  throw  on  the 
state,  which  was  to  contribute  largely,  refused  to  sanction  it  and 
referred  it  to  a  special  committee  for  revision.  After  much  study, 
the  bill,  modified  in  many  essential  details,  was  presented  to  the 
Senate  in  May,  1909.  It  was  again  subjected  to  a  most  spirited 
debate,  which  led  to  still  further  revision,  but  was  finally  passed 
March  22,  1910,  and  was  signed  by  the  President,  April  6,  following. 
In  its  present  form,  the  law  represents  the  views  of  the  Senate 
rather  than  those  of  the  House  of  Deputies.  It  rests  on  three 
fundamental  principles:  first,  the  obligation  to  insure;  second,  the 
accumulation  of  a  large  capital  insuring  financial  solvency;  and 
third,  the  collection  of  contributions  from  employes,  employers 
and  the  state. 

The  law  is  modelled  in  many  ways  after  the  old  age  and  in- 
validity insurance  law  of  Germany.  It  includes  in  its  provisions 
laborers  and  employes  of  both  sexes  in  all  industries,  in  commerce, 
in  agriculture,  and  in  domestic  service.  It  will,  therefore,  be  en- 
joyed by  nearly  18,000,000  persons  exclusive  of  railroad  employes, 
miners  and  seamen,  who  are  otherwise  provided  for.  Of  those 
affected  by  the  law,  6,000,000,  including  farmers,  small  proprietors, 
and  the  self-employed,  and  those  employing  only  one  workman,  are 
open  to  voluntary  insurance  under  extremely  favorable  conditions. 
All  others,  including  workingmen  and  women  of  all  classes  whose 
annual  earnings  are  below  3000  francs  (|6oo),  are  obliged  to  in- 
sure. Contributions  are  made  from  three  sources:  First,  from  the 
workers,  amounting  to  nine  francs  per  annum  ($1.80)  for  men,  six 
francs  ($1.20)  for  women  and  4.50  francs  (90  cents)  for  minors. 
These  sums  are  the  minimum  required  by  the  law,  the  insured  being 
permitted  to  make  additional  payments  in  order  to  receive  larger 
annuities.  Second,  from  employers,  who  must  contribute  for  each 
employe  a  sum  equal  to  the  minimum  required  from  the  employe. 
Third,  from  the  state,  a  bonus  fixed  at  60  francs  (|i  5)  a  year  added 
to  the  pension. 

The  voluntary  old  age  pension  funds  heretofore  in  operation 
are  preserved  under  the  new  law.  A  workman  may,  therefore, 
insure  in  any  one  of  the  following  classes  of  agencies:  (i)  the 
National  Old  Age  Pension  Fund  (Caisse  Nationale  des  Retraites 
pour  la  Vieillesse);  (2)  mutual  aid  societies;  (3)  departmental 

335 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

funds  established  by  the  government;  (4)  establishment  funds; 
(5)  mutual  funds  of  employers;  (6)  pension  funds  of  the  trade 
associations  (syndicats  professionelles).  These  are  all  under  the 
supervision  of  the  government  and  act  as  intermediaries  between 
the  insured  and  the  Caisse  des  Depots.  Premiums  are  paid  by 
the  employer  who  on  each  pay-day  may  deduct  the  required  sum 
from  the  wages  of  a  workman.  He  must  then  affix  to  the  card 
which  is  furnished  by  the  state,  stamps  equal  in  value  to  both  his 
and  the  workman's  contributions,  as  well  as  any  optional  payments 
made  by  the  latter. 

Benefits  begin  at  the  age  of  sixty-five  after  a  waiting  period 
of  30  contributory  years.  At  the  end  of  this  period,  the  full  pen- 
sion at  the  lowest  unit  of  contribution  will  be  414  francs  ($82.80) 
for  men  and  270  francs  ($54)  for  women.  This  includes  the  state 
bonus.  Ample  provision  is  made  for  those  who  because  of  their 
present  age  will  be  unable  to  meet  the  requirements  of  the  law  as  to 
the  waiting  period.  These  will  receive  the  annuity  to  which  their 
own  and  their  employer's  contributions  entitle  them;  and  in  addi- 
tion, will  receive  a  larger  bonus  than  60  francs  ($i  5)  from  the  govern- 
ment. For  example,  those  who  have  attained  the  age  of  sixty-five 
at  the  time  this  law  goes  into  effect  will  receive  100  francs  ($20)  a 
year,  the  maximum  bonus  allowed  by  the  government.  From  this 
point  the  bonus  grades  downward  to  the  minimum,  60  francs,  for 
those  who  are  now  beginning  their  payments  at  the  age  of  thirty- 
five.  The  law  still  further  extends  the  provisions  of  the  earlier 
pension  law  of  1905  to  all  workingmen  subject  to  compulsory  in- 
surance between  the  ages  of  sixty-five  and  sixty-nine  at  the  time 
the  new  law  goes  into  effect.  The  amounts  granted,  however,  are 
one-half  of  the  usual  old  age  pensions  and  must  not  exceed  100 
francs.  Those  who  have  already  attained  the  age  of  seventy,  re- 
ceive full  benefits  under  the  law  of  1905. 

Provision  is  also  made  for  those  who  become  completely  in- 
capacitated before  their  sixty-fifth  year  and  are  not  entitled  to  the 
benefits  of  the  accident  law.  Such  persons  are  entitled,  no  matter 
what  their  age,  to  advanced  payments  of  their  old  age  pensions 
together  with  the  bonus  from  the  state.  The  law  also  permits  cer- 
tain payments  to  be  made  to  the  widow  and  orphans  of  insured 
persons  dying  before  they  have  enjoyed  their  old  age  pensions. 

336 


FRANCE 

In  such  cases,  the  widow  may  receive  50  francs  (|io)  a  month  for 
three  months;  and  orphans  under  sixteen  50  francs  a  month  for 
six  months,  if  there  be  three  or  more  children;  50  francs  a  month 
for  five  months  if  there  be  two,  and  50  francs  a  month  for  four 
months  if  there  be  but  one  child. 

It  is  expected  by  those  who  have  studied  this  law  most  care- 
fully that  the  cost  to  the  state  will  in  all  probability  reach  180,- 
000,000  francs  (136,000,000)  for  the  first  year,  the  sum  decreasing 
until  the  plan  works  normally,  when  it  will  probably  amount  to  no 
less  than  125,000,000  francs  (125,000,000)  per  annum. 

The  most  important  of  the  friendly  societies  giving  old  age 
pensions  is  "La  France  Prevoyante."  Founded  in  1886,  it  was  at 
first  a  Tontine  Society.  It  was  reorganized  in  1896  and  is  today 
on  a  sound  basis.  It  has  in  all  90,000  members,  but  as  is  generally 
true  of  societies  of  this  kind  in  France,  they  are  mostly  clerks  and 
small  shopkeepers,  not  workingmen.  Members  pay  one  franc  per 
month,  and  after  a  term  of  fifteen  years  and  upon  attaining  the 
age  of  fifty  receive  a  pension  of  360  francs  (|y2) .  No  sickness  bene- 
fits are  paid.  Indigent  members  are  sometimes  helped  as  a  matter 
of  charity;  but  after  three  years  of  non-payment,  a  member  is  ex- 
pelled and  his  payments  revert  to  the  society.  He  may,  however, 
if  unable  to  pay,  notify  the  society  each  year,  and  in  such  case  re- 
ceive an  annuity  for  such  a  sum  as  his  payments  will  purchase.  In 
such  cases  the  minimum  sum  paid  in  must  amount  to  1 80  francs  ($36) . 
If  a  member  becomes  totally  and  permanently  disabled  after  the 
above  amount  has  been  paid  the  annuity  becomes  available  at  once. 
In  no  case  is  there  a  return  of  premiums  at  death.  No  agents  are 
employed  and  no  commissions  are  paid  for  obtaining  new  members. 
The  country  is  divided  into  districts;  and  the  society  has  tempo- 
rary offices  in  each,  which  are  open  the  second  Sunday  of  each  month 
from  nine  to  eleven  in  the  morning.  Here  dues  are  paid;  or  in 
case  this  method  is  impracticable  they  may  be  sent  to  the  cen- 
tral office,  through  the  post  office.  Fines  are  imposed  for  default 
in  payment;  thus  a  strict  accountability  is  preserved.  The  society 
gives  fetes,  dances  and  other  entertainments  at  which  prizes  and 
awards  are  distributed  to  those  who  have  secured  the  largest  num- 
ber of  new  members.  In  1908  the  total  funds  of  this  society 
amounted  to  30,000,000  francs  (f  6,000,000)  deposited  in  the  Caisse 

22  F  337 


INSURANCE    AGAINST    INVALIDITY    AND    OLD  AGE 


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FRANCE 

des  Depots.  This  society  receives  as  do  a  few  others,  a  maxi- 
mum subsidy  of  10,000  francs  per  annum  from  the  government. 
Table  120  on  the  preceding  page  shows  the  amount  of  the  annui- 
ties obtained  at  different  ages  by  annual  payments  of  12  francs. 

Another  mutual  society  of  interest  is  the  Prevoyance  Com- 
merciale.  It  belongs  to  the  group  of  reorganized  societies,  and 
was  founded  in  1881.  It  is  also  on  a  sound  financial  basis,  and 
has  reached  a  membership  of  6000  or  more.  Premiums  are  pay- 
able monthly  at  the  central  office  through  the  post  office,  no  agents 
being  employed  to  collect  or  to  increase  the  membership.  As  in 
La  France  Prevoyante,  new  members  are  obtained  through  the 
agency  of  those  who  already  belong.  No  sickness  benefits  are 
paid  and  no  one  over  forty-five  years  is  eligible.  Conditions  are 
somewhat  more  stringent  in  this  society;  members  forfeit  their 
rights  after  only  one  year  in  arrears.  If  non-payment  is  due  to 
neglect,  the  member  loses  all;  if  it  is  involuntary  the  society  ad- 
vances the  premiums  for  a  time  from  a  special  fund.  There  is  no 
return  of  premiums  in  event  of  death. 

The  following  table  shows  the  premiums  at  various  ages  of 
entry,  for  an  annuity  of  1 50  francs  from  the  age  of  fifty. 


TABLE    121.  —  PREMIUMS   REQUIRED  TO    PURCHASE    AN    ANNUITY   OF 

I5O  FRANCS,   BEGINNING   AT  AGE   FIFTY,    IN 

PREVOYANCE    COMMERCIALE 

Amount  of                                                     Amount  of 

Monthly                                                           Monthly 

Age  at                                   Payment            Age  at                                    Payment 

Admission                                 (Francs)        Admission                                 (Francs) 

10 

I  .40                            23 

3.00 

1  1 

1  .45                             24 

3.20 

12 

'•55                   25 

3.40 

'3 

1  .65                 26 

3-65 

>4 

'75                    27 

3.90 

>5 

1.85                    28 

4.20 

16 

1.95                    29 

4-55 

'7 

2.05                    30 

4.90 

18 

2.15                    31 

5.30 

19 

2.30                   32 

575 

30 

2-45                    33 

6.25 

21 

2.65                   34 

6.80 

22 

2.80                  35 

7-45 

This  society  paid  no  pensions  until  1891,  the  money  having 
in  the  meantime  drawn  interest  from  the  Caisse  des  Depots.    Since 

339 


INSURANCE  AGAINST   INVALIDITY   AND   OLD   AGE 

that  time,  annuities  have  been  paid,  beginning  with  the  age  of 
fifty.  Government  annuity  tables  are  used  and  the  maximum 
sum  is  360  francs  ($72).  Of  this  sum,  dues  purchase  300  francs 
($60)  only,  the  additional  60  francs  ($12)  being  added  by  the 
government  subvention,  which,  at  the  present  time,  amounts  to 
10,000  francs  ($2,000)  per  annum. 

SWITZERLAND 

There  is  no  federal  provision  of  any  kind  for  old  age  in 
Switzerland,  not  even  for  superannuated  officials;  and  but  few  sick- 
ness insurance  societies  (7^  per  cent  of  them  only)  grant  old  age  an- 
nuities. On  the  other  hand,  several  cantons  have  old  age  annuity 
plans  in  operation.  As  long  ago  as  March  29,  1898,  Canton 
Neuenburg  (Neufchatel)  established  a  department  which  fur- 
nishes life  insurance  as  well  as  old  age  annuities  to  applicants  of 
both  sexes  over  seventeen  years  of  age.  The  amount  of  insurance 
upon  any  one  life  was  limited  to  5000  francs  ($1000)  and  the 
amount  of  annuity  to  not  more  than  100  francs  ($20)  monthly. 
Premiums  are  fixed  without  reference  to  the  state  of  health  of  the 
applicant,  the  cost  of  the  added  risk,  which  is  determined  by 
medical  examination,  being  carried  by  the  canton.  Persons  who 
are  ill  may  also  be  taken,  with  a  waiting  period  of  three  years, 
during  which  time  only  the  premiums  paid  are  returned  in  event 
of  death. 

The  following  figures  will  show  the  transactions  of  this 
department  since  its  foundation. 

TABLE     122. — NUMBER     AND     VALUE     OF  POLICIES     IN     INSURANCE 

DEPARTMENT    AND    AMOUNT   OF    CANTONAL    SUBSIDY. 

CANTON    NEUENBURG,     1899-1906 


x~ 

Policies  in 
Force 

Value 
(Francs) 

Cantonal  Subsidy 
(Francs) 

1899 

1900 

1903 
1906 

8,626 
8,480 
8,638 
9.829 

7.7  '9.  1  36 
1.670,477 
8,195,506 
10,546,790 

96,406 
99.885 
105,871 
80,000 

The  canton  pays  for  management,  for  medical  examina- 
tions, and  in  addition,  for  the  added  risk  of  those  whose  premiums 

340 


SWITZERLAND 

should  be  larger  than  the  standard  rates.  It  also  grants  subven- 
tions toward  paying  the  net  premiums  of  policies  of  the  lowest 
denominations,  that  is  500  francs  (f  100)  in  case  of  death  and  30 
francs  (|6.oo)  monthly  for  a  pension.  Subsidies  are  met  out  of 
funds  raised  by  general  taxation. 

In  Canton  Waadt,  also,  an  annuity  scheme  guaranteed  by 
the  canton  has  been  in  operation  since  the  first  of  January,  1908. 
Its  principal  office  is  in  Lausanne.  The  fund  is  on  a  purely 
mutual  basis  and  is  open  to  all  persons  living  in  the  canton.  In- 
fluenced by  the  French  system,  annuities  may  be  purchased  with 
premiums  returnable  or  non-returnable  in  event  of  death,  the 
maximum  annuity  in  either  case  being  1200  francs  ($240)  a  year. 
Larger  annual  payments  than  1000  francs  (|2Oo)  are  not  per- 
mitted, and  during  the  ten  years  next  before  the  pension- begins, 
the  premium  payable  in  any  one  year  is  limited  to  250  francs  ($50). 
By  means  of  such  limitations,  the  institution  remains  popular  in 
character,  and  escapes  becoming  a  mere  convenience  for  the  well- 
to-do.  The  insured  may  pay  premiums  annually  or  more  frequently 
and  by  each  contribution  a  certain  portion  of  the  annuity  is 
secured.  The  annuities  may  begin  at  any  age  from  fifty  to  sixty- 
five.  They  are  payable  quarterly  and  are  based  on  the  French 
mortality  tables  with  3^  per  cent  interest.  To  increase  the  smaller 
annuities,  the  canton  grants  subventions  on  a  graded  basis  de- 
pending upon  the  contributions  of  the  insured.  Thus,  six  francs 
($1.20)  is  added  to  every  annual  contribution  between  6  and  12 
francs,  eight  francs  ($1.60)  to  those  between  12  and  24  francs  and 
10  francs  ($2.00)  to  those  between  24  and  60  francs.  The  smallest 
premium  permitted  is  two  francs  (40  cents)  and  up  to  six  francs 
the  contribution  of  the  canton  is  the  same.  These  subsidies 
are  paid  into  the  fund  annually.  In  cases  of  premature  in- 
validity, the  insured  has  a  right  to  an  annuity  beginning  at  once, 
corresponding  to  his  age  at  the  time,  to  which  is  added  the 
annuity  purchased  by  the  subsidies  of  the  canton.  In  other 
cases,  if  the  annuity  begins  at  an  earlier  age  than  sixty,  the 
contribution  of  the  canton  is  forfeited. 

Tables  123  and  124,  on  the  following  page,  will  show  the 
annuities  purchased  by  various  premiums,  both  on  the  basis  of 
returnable  and  non-returnable  premiums. 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 


TABLE     123. — ANNUITIES    SECURED    BY    ANNUAL    PAYMENT    OF 
FRANCS,    WITHOUT   SUBSIDY    FROM   THE   CANTON. 
CANTON    WAADT 


10 


Age  at 
First 
Payment 

WITHOUT  RETURN  OF  PREMIUMS 
(Francs) 

WITH  RETURN  OF  PREMIUMS 
(Francs') 

Age  at  Which  Pension  Begins 

Age  at  Which  Pension  Begins 

50 

55 

60 

65 

50 

55 

60 

65 

i 

5 
10 

'5 
20 

25 
30 

35 

40 

45 

105.07 
87.11 
68.74 

53-44 
40.71 
30.20 
21.54 
14.41 
8.56 
3.81 

'59-75 
133.21 
106.04 

83-43 
64.62 
49-10 
36.29 

25-73 
17.08 
10.08 

257.05 
215  24 
172.45 
136.82 
107.18 
82.72 
62.54 
45.92 
32.31 
21.25 

448.04 
376.24 
302.75 
241.61 
190.68 
148.69 
1  14.06 
85.56 
62.19 
43.20 

72.80 

59-27 
45.28 

33-97 
24.91 
17.70 
12.04 
7.66 
4.31 
i  .8  1 

109.60 
89.590 
68.90 
52.22 
38.85 
28.20 
19.84 
13.32 

8.34 
4.01 

174.69 
143.19 
110.59 
84.27 
63.20 
46.42 
33-21 
22.93 
15.08 
9.22 

302.04 
247.94 
191.94 
146.77 
1  10.56 
81.78 
59-12 
41.52 
28.05 
17.99 

TABLE    124. — ANNUITIES  SECURED  AT   THE    AGE    OF    SIXTY    BY   CON- 
TINUOUS ANNUAL   PAYMENTS  OF  6,   12,  24  AND  60  FRANCS 
IN    ADDITION   TO  ANNUAL   SUBSIDY    FROM    THE 
CANTON.      CANTON    WAADT 


WITHOUT  RETURN  OF  PREMIUMS 

WITH  RETURN  OF  PREMIUMS 

Age  at 
First 

Annual  Payments 

Annual  Payments 

Payment 

(Francs') 

(Francs) 

6 

12 

24 

60 

6 

12 

24 

60 

i 

308 

5'4 

874 

259 

4'5 

676 

5 

258 

430 

732 

215 

344 

559 

1040 

10 

207 

345 

582 

1184 

170 

27' 

438 

813 

'5 

164 

274 

465 

944 

'33 

21  I 

339 

628 

20 

129 

214 

364 

744 

1  02 

162 

259 

480 

25 

99 

,65 

281 

578 

77 

122 

194 

360 

30 

75 

125 

213 

438 

57 

90 

142 

262 

35 

55 

92 

156 

321 

4' 

64 

101 

184 

40 

39 

65 

I  IO 

226 

28 

44 

69 

123 

45 

26 

43 

72 

149 

28 

43 

77 

342 


ITALY 


Recently  other  cantons  have  taken  up  the  matter  and  sev- 
eral, including  Geneva  and  St.  Gall,  have  old  age  annuity  schemes 
under  consideration. 


ITALY 

In  1898  an  old  age  and  invalidity  insurance  law  was  enacted, 
which  like  the  accident  insurance  law  of  the  same  year,  had  been 
in  process  of  development  for  twenty  years.  For  our  purposes, 
it  is  enough  to  say  that  all  propositions  centered  around  the  idea 
of  voluntary  insurance,  with  a  state  subsidy,  in  connection  with 
the  operations  of  the  National  Postal  and  Savings  Bank.  As 
finally  passed,  the  statute  called  for  the  establishment  of  a  Na- 
tional Old  Age  and  Invalidity  Annuity  Fund  for  the  voluntary 
insurance  of  workingmen,  with  its  headquarters  in  Rome  and 
branches  in  the  provinces  and  communes.  This  fund  gives  an 
opportunity  to  workingmen  and  workingwomen  to  deposit  savings, 
which  are  increased  by  government  subventions,  and  gifts  from  cor- 
porate bodies  and  individuals,  all  of  which,  augmented  by  interest, 
will  be  applied  to  the  purchase  of  old  age  annuities. 

Capital  for  the  fund  was  created  by  an  original  grant  of 
10,000,000  lire  ($2,000,000)  made  from  the  public  treasury,  and 
during  the  early  years  of  the  existence  of  the  fund,  a  certain  pro- 
portion of  the  annual  revenue  from  this  was  placed  to  its  capital 
account,  so  that  at  the  termination  of  the  tenth  year,  the  cap- 
ital was  expected  to  reach  an  amount  not  less  than  16,000,000 
lire  ($3,200,000).  This  has  actually  been  realized. 

Contributions  are  received  in  sums  of  not  less  than  one- 
half  lire  (10  cents)  but  must  not  be  more  than  100  lire  ($20)  in 
any  one  year.  Upon  joining  the  Fund,  the  applicant  must 
declare  whether  he  wishes  his  annual  contributions  to  go  to  the 
common  credit  of  all  members  subscribing  on  such  mutual  terms 
or  prefers  that,  in  case  of  his  death  the  amount  paid  in  by  him 
be  returned  to  his  family;  that  is,  whether  he  desires  to  purchase 
a  deferred  annuity  on  the  premium  returnable  or  non-returnable 
plan.  So  much  of  the  annual  income  of  the  fund  as  remains 
after  deducting  management  expenses  and  additions  to  the  capital, 
is  annually  placed  to  the  credit  of  the  insured. 

343 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

Each  member  has  his  own  separate  account,  in  which  are 
credited  his  contributions  with  the  annual  subsidies  from  the 
state,  together  with  such  other  sums  as  may  accrue  to  his  credit. 
Each  account  is  closed  when  a  period  of  at  least  25  years  shall  have 
elapsed  since  the  date  of  the  first  payment,  and  the  member  shall 
have  completed  his  sixtieth  or  his  sixty-fifth  year  as  may  be 
determined  by  the  rules.  Whatever  sum  then  belongs  to  him  is 
to  be  converted  into  an  immediate  life  annuity.  Sometimes 
other  arrangements  for  the  disposal  of  this  sum  may  be  made. 
In  case  of  invalidity  occurring  before  the  time  when  the  account 
would  normally  terminate  it  may  be  closed  forthwith,  but  only 
if  five  years  shall  have  elapsed  since  he  became  a  member.  In 
case  of  invalidity,  the  life  annuity,  resulting  from  the  conversion 
of  the  moneys  standing  to  his  credit,  will  be  increased  by  the 
application  of  a  special  invalidity  fund  formed  (i)  by  sums  con- 
tributed by  persons  under  legal  obligations  to  provide  for  those 
unable  to  work;  (2)  sums  standing  to  the  credit  of  the  invalidity 
fund;  (3)  any  gifts  or  other  extraordinary  receipts  accruing  for 
the  benefit  of  the  permanently  disabled;  and  (4)  interest  on  the 
capital  of  the  invalidity  fund.  Mutual  societies  established  to 
provide  old  age  or  invalidity  benefits  may  turn  over  their  assets 
and  transfer  their  members  to  the  annuity  fund,  which  will 
assume  the  liabilities  and  receive  the  further  contributions,  sub- 
ject to  conditions  prescribed  by  the  government. 

Administration  is  entrusted  to  a  board  established  by  royal 
decree,  composed,  in  part,  of  representatives  of  savings  banks 
and  of  other  contributing  institutions.  Representatives  of  work- 
ingmen  who  are  members  of  the  fund  are  also  appointed  to  the 
board,  such  representatives  constituting  one-fourth  of  the  total 
number.  The  Department  of  Agriculture,  Industry  and  Commerce, 
the  Treasury  Department  and  the  Post  and  Telegraph  Department 
each  has  one  official  representative.  Affairs  of  the  fund  are  under 
the  supervision  of  the  Department  of  Agriculture,  Industry  and 
Commerce,  to  which  its  balance-sheets  are  submitted.  This  fund 
began  operations  October  i,  1899,  and  was  received  with  such  en- 
thusiasm that  it  prospered  from  the  outset.  Experience  in  practical 
administration  soon  showed  possibilities  of  improvement,  and 
accordingly  a  number  of  amendments  were  passed,  between  1901 

344 


ITALY 

and  1906,  permitting  much  greater  freedom  in  the  investment  of 
assets  and  many  additional  privileges  and  benefits  to  the  insured. 

The  more  important  changes  and  additions  in  these  amend- 
ments may  be  summarized  *as  follows:  The  ordinary  annual 
income  of  the  fund  was  enlarged  by  increasing  its  share  in  the 
annual  net  surplus  of  the  Postal  Savings  Bank  to  seven-tenths,  and 
its  share  in  the  annual  net  surplus  arising  from  management 
of  the  deposits  with  the  government  required  by  law,  to  one- 
half.  In  the  account  opened  with  the  insured,  not  only  his 
yearly  contributions  and  the  amount  of  the  subsidy  are  entered, 
but  the  amount  of  annuity  which  the  total  credits  would  pur- 
chase. Each  subscriber  is  now  given  a  book  containing  these 
entries,  so  that  he  may  at  all  times  see  what  his  rights  and  privi- 
leges are.  Certain  classes  of  workingmen,  such  as  those  in  mines, 
glass  furnaces,  glassworks,  etc.,  among  whom  invalidity  is  apt  to 
be  premature,  are  permitted  to  close  accounts  at  the  age  of  fifty, 
instead  of  at  sixty  or  sixty-five.  To  such,  the  minimum  amount 
of  the  annual  contribution  is  not  six  ($1.20)  but  nine  lire($i.8o). 
In  addition,  workingmen  are  permitted  to  conclude  payment  for 
their  annuities  at  an  earlier  period,  but  in  no  case  may  it  be  less 
than  ten  years. 

The  special  invalidity  fund  is  increased  by  a  grant  of  10,000,- 
ooo  lire  ($2,000,000)  from  the  state,  payable  in  five  equal  annual 
instalments,  to  be  completed  in  1911.  By  this  means,  it  is  pos- 
sible to  give  totally  and  permanently  disabled  workingmen  who 
have  made  only  five  yearly  payments,  and  who  under  the  law  were 
entitled  to  benefits,  a  minimum  pension  for  life  of  120  lire  ($24) 
per  annum. 

A  system  of  special  subscriptions,  bonuses,  private  and 
public  subsidies,  etc.,  for  the  benefit  of  members  of  trade  unions, 
of  mutual  aid  societies  and  similar  workingmen's  organizations, 
is  also  provided  for,  in  order  to  encourage  insurance  of  members 
of  such  clubs  and  organizations.  As  in  Belgium,  the  new  law 
permits  the  fund  to  loan  its  money  to  build  workingmen's  homes; 
but,  as  yet,  little  use  has  been  made  of  this  privilege.  It  is  per- 
mitted to  carry  on  other  forms  of  insurance,  such  as  industrial 
life  insurance,  annuities  for  widows  and  orphans,  etc.  These  ac- 
tivities also  have  not  as  yet  been  developed. 

345 


INSURANCE   AGAINST   INVALIDITY   AND   OLD   AGE 

The  following  figures  will  serve  to  indicate  the  wide  sphere 
of  usefulness  of  this  fund,  notwithstanding  the  short  period  which 
has  elapsed  since  its  foundation. 

TABLE    125.  —  NUMBER  INSURED  AND  VALUE  OF  ANNUITY   FUND, 
DECEMBER  31,  1899-1907 

Year  Number  Insured  Value  of  Fund 

(Lire) 
1899  776  12,328,820.51 


1900 
1901 
1902 
1903 
1904 
1905 
1906 
1907 


11,055  14,340,174.97 

31,378  17,531,171.82 

85,848  22,044,439.39 

114,239  28,231,323.07 

145,663  34,034,588.03 

169,196  42,980,312.16 

219,967  51,849,502.64 

255,127     about  62,000,000.00 


In  spite  of  the  comparatively  small  number  of  its  bene- 
ficiaries, it  must  be  confessed  that  there  is  very  little  likelihood 
of  any  further  extension  on  the  part  of  the  government,  for  some 
time  to  come.  The  subsidy  already  amounts  to  over  2,000,000 
lire  ($400,000)  annually,  besides  the  large  initial  contributions. 
When  the  straitened  financial  condition  of  Italy  is  borne  in  mind, 
it  appears  that  for  the  present,  at  any  rate,  the  state  has  gone 
about  as  far  as  is  possible. 

GERMANY 

The  passage  of  the  sickness  and  accident  insurance  laws  here- 
tofore mentioned,  left  only  old  age  and  invalidity  insurance  to 
complete  the  plan  of  workingmen's  protection  outlined  by  Em- 
peror William  I.  Apart  from  associations  of  miners  and  railway 
employes,  insurance  against  old  age  and  invalidity  was  in  the  hands 
of  a  few  small  mutual  organizations  and  was  voluntary.  A  thor- 
ough investigation  was  made  by  actuaries  into  the  problems 
of  such  a  system,  and  upon  their  report,  a  measure  was  drawn 
up  by  the  Ministry  of  the  Interior,  approved  by  the  Emperor, 
and  published  as  a  preliminary  draft  on  November  17,  1887. 

This  proposed  legislation  was  the  most  radical  step  as  yet 
taken,  and  from  the  first,  encountered  great  opposition.  After 
much  discussion,  a  compromise  was  effected  between  representa- 
tives of  the  government,  of  the  manufacturing  and  of  the  labor 

346 


GERMANY 

interests.  It  resulted  in  a  measure  which  was  introduced  into  the 
Reichstag,  and,  under  pressure  by  Bismarck,  was  passed  on  June 
22,  1889,  by  the  small  majority  of  20  votes. 

The  law  went  into  effect  January  i,  1891.  After  nearly  nine 
years  of  successful  operation,  it  was  replaced  by  a  much  more  com- 
prehensive law  passed  July  13,  1899.  So  great  was  the  change  in 
the  attitude  of  the  representatives  of  employers  in  the  Reichstag 
and  of  the  nation  as  a  whole,  that  the  new  bill  was  passed  almost 
unanimously.  In  its  present  form,  the  law  provides  that  all  per- 
sons over  the  age  of  sixteen,  working  for  wages,  must  insure 
against  invalidity  (total  and  permanent  disability  not  due  to 
occupational  accident)  and  old  age.  In  addition,  it  applies  to 
managing  employes,  clerks  in  stores  and  offices,  marine  officers, 
and  to  teachers  of  all  kinds  whose  annual  earnings  are  not  more  than 
2000  marks  ($500).  The  obligation  to  insure  may  further  be  ex- 
tended by  order  of  the  Bundesrath  to  employers  employing  but 
one  assistant  and  to  persons  carrying  on  home  industries,  irre- 
spective of  the  number  of  workmen.  Small  employers  and  self- 
employed  workingmen,  not  subject  to  compulsion,  may  insure 
voluntarily,  provided  they  are  not  over  forty  years  of  age. 

All  government  servants,  as  well  as  teachers  in  the  public 
schools  or  institutions  during  the  period  of  training,  or  if  embraced 
in  some  service  pension  scheme,  are  exempt  from  compulsory 
insurance.  So  also  are  soldiers  when  employed  as  workingmen 
during  their  service;  employes  of  insurance  institutions  and  of  spe- 
cial insurance  organizations  when  embraced  in  a  service  pension 
scheme;  students  acting  as  tutors;  infirm  persons  already  enti- 
tled to  an  invalidity  pension  or  whose  capacity  for  work  is  perma- 
nently reduced  more  than  one-third  by  old  age  or  disability  from 
disease  or  accident;  and,  finally,  persons  who  receive  mainte- 
nance only  in  lieu  of  wages,  and  mere  occasional  laborers. 

The  law  gives  all  contributing  workingmen  a  right  to  an 
annuity  during  old  age  or  invalidity,  the  annuity  being  paid  to  all 
who  reach  the  age  of  seventy,  whether  then  actually  disabled  or 
not,'  the  invalidity  pension  is  paid  irrespective  of  age  to  every 
person  who  becomes  permanently  disabled  (otherwise  than  by 
occupational  accident)  so  that  he  is  unable  to  earn  more  than  one- 
third  of  his  average  wages.  Continued  sickness  benefits  are  pro- 

347 


INSURANCE   AGAINST   INVALIDITY   AND   OLD   AGE 

vided  for  those  who  have  been  in  receipt  of  them  from  sickness 
insurance  societies  for  26  weeks  and  are  still  unable  to  work. 

Before  an  old  age  annuity  is  granted,  the  member  must  have 
contributed  for  at  least  1200  weeks;  before  an  invalidity  annuity 
is  given,  at  least  200  weeks.  Periods  of  disability,  as  well  as  of 
military  service,  are  reckoned  part  of  the  required  number  of 
weeks,  even  though  no  contributions  were  made  during  those 
periods.  Applicants  for  old  age  pensions  who  had  reached  or  passed 
the  age  of  forty  when  compulsory  insurance  was  introduced,  are 
required  to  contribute  only  as  many  weeks  less  than  1200,  as  are 
found  by  deducting  40  times  the  excess  of  the  actual  years  of  age 
over  forty.  If,  for  example,  the  applicant  was  fifty  years  old 
when  the  law  went  into  effect,  the  1200  weeks  would  be  shortened 
by  ten  times  40,  namely,  400  contributory  weeks,  which  would 
leave  only  800  weeks.  In  addition,  periods  of  temporary  inter- 
ruption in  regular  employment  or  in  seasonal  trades  are  allowed 
off,  these  not  to  exceed  four  months  in  each  calendar  year. 

TABLE    126. — JOINT  WEEKLY    CONTRIBUTIONS    OF    EMPLOYER    AND 

EMPLOYES    FOR  OLD    AGE   AND   INVALIDITY   INSURANCE 

BY   WAGE  CLASS 

Wage  Class  Wages  Weekly  Contributions 

(Marks)  (Pfennige) 

I  Up  to  350  14 


II 

III 

IV 

V 


350  to    550  20 

551  "    850  24 

851  "  1 150  30 

Over     1150  36 


The  cost  of  old  age  and  invalidity  pensions  is  to  a  consider- 
able extent  provided  for  by  the  government.  It  pays  expenses  of 
administration,  adds  a  fixed  amount — 50  marks  ($12.50)  per  an- 
num— to  each  old  age  pension  and  pays  the  contributions  of  men 
while  serving  in  the  army  or  navy.  The  remainder  of  the  cost  is 
borne  in  equal  shares  by  the  insured  and  their  employers.  The 
amount  of  pension  and  the  contributions  are  based  on  the  average 
yearly  wages  earned  in  the  occupation  in  which  the  insured  is  en- 
gaged, as  determined  by  managers  of  sickness  and  accident  insur- 
ance funds.  As  a  substitute,  in  the  case  of  common  laborers  300 
times  the  usual  daily  wages  in  the  locality  may  be  taken  as  the 

348 


GERMANY 

basis  for  estimating  contributions.  The  insured  are  divided  into 
five  wage  classes.  The  scale  of  weekly  contributions  in  these 
classes  payable  by  employers  and  workingmen  jointly  until  De- 
cember 31,  1910,  is  given  in  Table  126. 

Benefits  in  a  higher  class  than  that  to  which  the  workingman 
belongs  may  be  procured  if  both  employer  and  employe  agree  to 
pay  for  the  more  ample  provision. 

As  a  rule,  the  employer  pays  the  total  contributions  by 
affixing  stamps  of  the  old  age  and  invalidity  fund  to  the  receipt 
card  furnished  by  it.  He  is  then  entitled  to  deduct  half  the  cost 
from  the  wages  of  the  employed.  The  employer  then  turns  the 
card  over  to  the  police  authorities  who  forward  it  to  the  Imperial 
Insurance  Office  for  registry.  The  system  is  thus  kept  simple  and 
almost  automatic,  and  has  developed  in  high  degree  the  possibili- 
ties of  a  self-regulating  administration.  Contributions  are  paid  regu- 
larly for  each  week  the  insured  is  employed.  Supervision  is  exer- 
cised through  special  agents  of  the  Imperial  Insurance  Department 
who  visit  the  homes  and  factories  of  the  insured.  They  have 
the  right  to  inspect  payrolls  and  to  investigate  the  number  of 
employes,  wages,  etc.  Heavy  penalties  are  imposed  for  falsifica- 
tion, and  should  an  employer  succeed  in  keeping  the  knowledge 
of  any  of  his  employes  from  the  authorities,  he  would  be  compelled 
himself  to  pay  the  entire  annuity.  The  best  supervision,  how- 
ever, is  exercised  by  the  workman  himself  who,  since  there  is  a  de- 
duction from  his  wages,  sees  that  the  stamps  are  affixed. 

The  amounts  of  the  pension  for  old  age  and  invalidity  are 
made  up  according  to  the  following  tables. 


TABLE     127. — ANNUAL    PENSIONS    AND  GOVERNMENT   BONUSES     BY 
WAGE    CLASS     UNDER  OLD    AGE    INSURANCE 


Wage  Class 

Pension 

Annual  Bonus 
by  Government 

Total 
Pension 

(Marks) 

(Marks') 

(Marks) 

I 

60 

5° 

I  1O 

II 

QO 

5° 

140 

III 

1  20 

5° 

170 

IV 

150 

5° 

200 

V 

1  80 

5° 

230 

349 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

TABLE     128.  — ANNUAL   PENSIONS    AND   GOVERNMENT   BONUSES     BY 
WAGE   CLASS    UNDER  INVALIDITY    INSURANCE 


TOTAL  PENSION 

Wage 
Class 

Pension 

Annual 
Bonus  by 
Government 

Weekly 
Bonus 
by 
Government 

After  200 
Contributory 
Weeks 

After  2500 
Contributory 
Weeks 

(Minimum) 

(Maximum) 

(Marks) 

(Marks) 

(Pfennige) 

(Marks) 

(Marks) 

I 

60 

5° 

3 

I  16.40 

185.40 

II 

70 

5° 

6 

126.00 

270.00 

HI 

80 

50 

8 

134.40 

330.00 

IV 

90 

50 

10 

142.20 

390.00 

V 

IOO 

50 

12 

150.00 

450.00 

Though  small,  these  benefits  are  larger  than  contributions 
would  purchase  under  a  voluntary  or  private  insurance  system. 
In  view  of  the  state  subsidy  and  the  contributions  of  employers, 
equal  in  amount  to  the  workingmen's,  the  yearly  pension  in  every 
case  is  more  than  twice  what  could  be  purchased  by  the  sums 
paid  by  workingmen  alone.  All  pensions  are  paid  in  monthly 
instalments  in  advance,  cannot  be  pledged  or  assigned,  and 
are  exempt  from  seizure  for  debt.  If  the  beneficiary  is  in  receipt 
of  a  pension  for  a  disabling  accident  or  of  a  pension  from  the  state, 
his  old  age  or  invalidity  pension  remains  in  abeyance,  if  either  one 
of  the  others  plus  his  personal  income,  from  whatever  source, 
exceeds  seven  and  one-half  times  the  fixed  sum  of  the  invalid  pen- 
sion of  his  class,  not  including  the  supplement  by  the  government 
or  the  increase  due  to  the  number  of  contributions  paid.  The 
pension  likewise  remains  in  abeyance  whenever  the  beneficiary  is 
in  prison  or  in  a  foreign  country. 

In  addition  to  these  old  age  and  invalidity  pensions  and  the 
benefits  beyond  26  weeks  of  sickness,  the  law  restores  the  con- 
tributions made  for  a  period  of  at  least  200  weeks,  (i)  to 
women  contributors  who  marry  before  obtaining  a  pension,  (2) 
to  the  surviving  dependents  of  contributors  who  die  before  be- 
coming entitled  to  a  pension,  and  (3)  to  such  contributors  as  are 
totally  and  permanently  disabled  by  occupational  accident  and 
who,  because  their  accident  pensions  are  higher,  do  not  become 
entitled  to  invalidity  pensions.  Benefits  during  sickness,  with 

350 


GERMANY 

relief  also  to  the  family,  may  be  granted  if  a  claim  for  an  in- 
validity pension  is  likely  to  result. 

The  administration  of  the  old  age  and  invalidity  insurance 
law  is  the  only  one  of  the  three  systems  now  in  use  in  Germany 
which  is  bureaucratic  in  character.  Subject  to  the  approval  of 
the  Federal  Council,  the  government  entrusts  the  management 
to  state  insurance  institutions,  the  jurisdiction  of  which  extends 
over  a  kingdom,  province  or  free  city.  Some  of  the  larger  cities, 
Berlin,  for  instance,  have  such  an  organization  covering  only  the 
metropolitan  territory  and  vicinity.  There  are  31  old  age  and  in- 
validity pension  districts.  The  law  also  allows  certain  establish- 
ment or  industry  funds  or  associations,  already  in  existence,  to 
be  recognized  as  special  old  age  and  invalidity  pension  organiza- 
tions, provided  they  grant  their  members  benefits  at  least  equal 
to  those  prescribed  by  law.  Certain  organizations  in  mining  and 
railway  industries  are  of  this  class. 

Each  such  state  insurance  institution  can  sue  and  be  sued 
in  its  own  name.  It  is  conducted  in  accordance  with  the  statute 
and  subject  to  the  approval  of  the  Imperial  Insurance  Office. 
Administration  is  entrusted  to  a  board  of  directors,  composed  of 
communal  or  state  officers,  nominated  by  district  authorities. 
There  is  also  a  committee  of  ten,  connected  with  the  institution, 
consisting  of  five  representatives  each  of  employers  and  employes, 
the  latter  being  chosen  by  managers  of  the  sickness  insurance 
societies. 

Special  pension  offices  may  also  be  established  locally  to 
administer  the  business  and  to  relieve  the  local  authorities  so 
far  as  to  receive  and  examine  claims.  When  a  claim  is  made  to 
the  local  administrative  authorities  or  to  such  a  pension  office, 
one  representative  each  of  employers  and  employed  may  be 
invited  to  attend.  In  the  more  important  cases,  the  claimant 
or  the  recipient  of  a  pension  may  be  called  before  them.  The 
claim  is  transmitted  to  the  proper  insurance  institution  and  it 
then  devolves  on  the  board  of  directors  to  approve  or  reject  it  in 
writing.  If  the  pension  is  allowed,  the  government  commissioner 
must  receive  a  copy  of  the  award.  In  any  case,  the  claimant 
or  the  insurance  officials  may  appeal  within  one  month  from  the 
decision  to  an  arbitration  court.  These  conditions  are  the  same  as 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

those  for  accident  insurance.  A  second  appeal  may  be  made  by 
either  party  within  one  month  to  the  Imperial  Insurance  Office; 
there  the  decision  is  final.  If  the  pension  is  granted,  the  claimant 
receives  a  certificate  of  the  sum  payable  to  him  and  a  desig- 
nation of  the  post  office  at  which  the  pension  will  be  paid. 

While  each  old  age  and  invalidity  pension  insurance  insti- 
tution conducts  its  business  and  administers  its  funds  inde- 
pendently, the  government  reserves  the  right  of  general  super- 
vision. There  are  two  sorts  of  funds,  one  common  to  all  insurance 
institutions  and  one  reserved  for  the  treasury  of  the  individual 
institution.  Into  the  former  goes  two-fifths  of  the  revenue  from 
the  contributions  of  employers  and  employes.  Out  of  this 
fund,  three-fourths  the  cost  of  all  old  age  pensions  is  defrayed, 
also  the  fixed  portion  of  all  invalidity  pensions  and  the  entire  cost 
of  sick  benefits.  All  other  obligations  constitute  charges  against 
individual  insurance  institutions.  This  division  of  funds  was 
necessary  because  of  the  financial  problems  of  insurance  insti- 
tutions in  the  rural  districts.  There  persons  of  advanced  age 
form  a  larger  proportion  of  the  population  than  in  industrial 
or  commercial  districts  and  so  entail  a  larger  expenditure. 
Since  the  establishment  of  this  common  fund,  January  i,  1900 
the  cost  of  old  age  pensions  has  been  more  uniformly  dis- 
tributed. 

The  investments  of  these  insurance  institutions  are  sub- 
ject to  much  the  same  restrictions  as  trust  funds.  With  the 
consent  of  the  authorities,  however,  investments  may  be  made 
up  to  one-half  of  the  total  funds,  in  permanent  buildings  for  the 
benefit  of  the  insured  workingmen.  Considerable  sums,  for 
example,  have  been  invested  in  hospitals  and  in  homes  for  con- 
valescents; and  among  the  most  useful  activities  of  this  nature 
are  loans  at  low  rates  of  interest,  to  associations  which  build 
apartment  houses  in  the  cities  and  houses  in  the  suburbs,  to  be 
sold  to  workingmen  on  easy  monthly  or  even  weekly  payments. 

The  system  of  old  age  and  invalidity  pensions  became 
operative  January  i,  1891.  So  complete  was  the  organization  of 
the  plan  that  1 1 ,490,220  persons  became  insured  in  the  39  in- 
surance institutions  in  the  course  of  the  first  year.  The  following 
table  gives  the  history  of  the  system  to  the  year  1907. 

352 


GERMANY 


TABLE    129. — NUMBER    OF   INSURANCE   AGENCIES  AND   OF    PERSONS 
INSURED  AGAINST  OLD  AGE   AND  INVALIDITY,    1891-1907 


Year 

Insurance 
Institutions 

Special 
Funds 

Total  Number  of 
Insurance  Agencies 

Number  Insured 

1891 

3' 

8 

39 

1  1,490,220 

1895 

3» 

9 

40 

12,144,530 

1900 

3' 

9 

40 

13,015,100 

1905 

3' 

9 

40 

13,948,200 

1906 

3< 

9 

40 

14,142,700 

1907 

3' 

10 

4' 

14,958,118 

In  1907,  10,350,293  of  the  14,958,118,  persons  insured,  or  69 
per  cent,  were  men,  and  4,607,825,  or  31  per  cent,  were  women. 
In  the  very  first  year,  132,926  old  age  and  31  invalidity  pensions 
were  granted  to  persons  who  had  not  contributed.  In  the  course 
of  a  few  years,  however,  the  operations  of  these  institutions  be- 
came more  nearly  normal.  While  the  number  of  old  age  pensions 
granted  each  year  fell  off  regularly,  the  number  of  invalidity  pen- 
sions increased  out  of  all  proportion,  the  number  of  persons  to 
whom  continued  sickness  benefits  were  accorded,  of  course,  not 
being  affected. 

The  following  table  shows  the  number  of  invalidity,  sickness 
and  old  age  pensions  newly  granted  annually  and  the  total  number 
in  force  in  certain  years  up  to  1908. 

TABLE    130. — NUMBER  OF  PENSIONS  AND   NUMBER  PAID  FOR  FIRST 
TIME,  FOR  INVALIDITY,  SICKNESS  AND  OLD  AGE,    1891-1908 


Year 

INVALIDITY  PEN- 
SIONS 

SICKNESS  PENSIONS 

OLD  AGE  PENSIONS 

Total 
Number 
in  Force 

Number 
Paid  for 
First  Time 

Total 
Number 
in  Force 

Number 
Paid  for 
First  Time 

Total 

Number 
in  Force 

Number 
Paid  for 
First  Time 

1891 
1895 
1900 
1905 
1906 
1907 

450,056 
857,823 

891,730 
926,795 

3' 
55.983 
>25.737 
122,868 
1  10,969 
.    112,220 
116,852 

28,846 
32,561 
33,624 

6,677 
11,861 
12,421 
11,529 
11,951 

214,985 
1  56,,  58 
144,766 
136,416 

132,926 

30,144 
19,852 
10,692 
10,666 
10,813 
10,986 

23  F 


353 


INSURANCE    AGAINST    INVALIDITY   AND    OLD   AGE 

By  the  close  of  1908,  a  total  of  2,193,731  pensions  had  been 
granted  in  the  17  years  of  operation,  of  which  1,632,873  were  for 
invalidity,  90,479  for  sickness  and  470,379  for  old  age.  The 
number  is  still  rapidly  increasing  and  will  continue  to  increase 
for  years  to  come  until  the  number  of  pensions  expiring  on 
account  of  death  and  other  causes  equals  or  exceeds  those  newly 
granted. 

Study  of  the  figures  of  invalidity  pensions  showed  that  the 
increases  were  too  marked  to  represent  a  normal  growth.  A  special 
commission  was  on  that  account  appointed  several  years  ago  to 
investigate  the  subject  and  to  determine  to  what  extent  simulation 
and  lax  enforcement  of  the  law  accounted  for  the  unexpectedly 
large  increases,  and  if  these  were  preventable.  The  commission 
went  from  city  to  city,  selecting  beneficiaries  at  random  and  sub- 
mitting them  to  careful  medical  examination.  As  might  be  ex- 
pected, it  found  that  many  drew  pensions  who  were  not  enti- 
tled to  them.  The  law  since  then  has  been  much  more  stringently 
enforced;  pensioners  have  been  re-examined  and  many  dropped 
from  the  rolls.  Figures  for  the  last  few  years,  accordingly, 
show  virtually  no  increase  in  the  number;  yet  it  is  the  opinion  of 
the  authorities  that,  even  under  this  careful  administration,  no 
one  is  deprived  of  the  benefits  due  him  under  the  law. 

It  has  also  been  found  that  the  rise  and  fall  in  the  amount 
of  invalidity  pensions  are  largely  influenced  by  the  state  of  the  labor 
market.  In  good  times,  even  the  partially  incapacitated  endeavor 
to  obtain  work,  since  pensions  are  lower  than  their  earnings. 
This  takes  them  off  the  funds.  In  slack  times,  on  the  other  hand, 
when  many  of  the  ablest-bodied  workingmen  cannot  obtain  employ- 
ment, the  partly  disabled  and  weaker  members  must  fall  back  on 
the  invalidity  fund.  In  Berlin,  for  example,  where  there  has  al- 
ways been  careful  supervision,  the  invalidity  pension  roll  in  1908 
was  at  the  highest  point  in  its  history,  owing  undoubtedly  to  the 
industrial  depression  and  to  the  difficulty  of  securing  employment. 
Weakness  due  to  undernutrition  is,  during  such  periods,  also  a 
factor. 

The  average  amount  of  pension  in  each  one  of  the  three 
classes,  namely,  invalidity,  sickness  beyond  26  weeks,  and  old  age, 
is  shown  in  Table  131. 

354 


GERMANY 


TABLE     131. — AVERAGE    PENSIONS  PAID  FOR  INVALIDITY,  SICKNESS, 
AND  OLD  AGE,    1891-1907 


Ye, 

ir 

For  Invalidity 
(Marks) 

For  Sickness 
(Marks) 

For  Old  Age 
(Marks) 

1891 
1896 

1900 

1905 

1906 

1907 

113.5 
126.7 
142.04 

'59i2 
162.88 

166.04 

'47-73 
160.73 
163.29 
166.24 

124.0 
133.4 

'45-54 
159.10 
160.80 
161.64 

Although  the  average  amount  of  the  pensions  has  risen  con- 
tinuously since  1891,  they  are  still  pitiably  small,  only  about 
|4O  per  annum.  In  derision  they  are  often  called  "Trinkgeld" 
pensions.  The  authorities  explain  that  the  gradual  decline  of 
bodily  vigor  in  consequence  of  old  age,  disease,  and  other  causes 
is  inevitable  in  the  ordinary  course  of  life  and  should  in  the  main 
be  provided  for  by  every  prudent  workingman  himself;  that  in- 
validity and  old  age  insurance  does  not  make  provision  beyond  a 
scant  subsistence,  and  that  the  amount  should  be  considered 
merely  a  supplement  to  savings  and  not  a  substitute.  Total 
benefits  are,  nevertheless,  very  large  as  appears  in  Table  132. 

TABLE   132. — EXPENDITURES    FOR   BENEFITS   FOR  INVALIDITY,  SICK- 
NESS,  AND  OLD  AGE,    1891-1907 


Additional 

Year 

Medical 
Care 

Aid  to 
Depend- 
ents, etc. 

Nursing 
of  In- 
valids 

Pensions  to 
Invalids 

Pensions 
to  Sick 

Pensions 
to  Aged 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1891 

400 

IOO 

15,299,000 

1895 

63  i  ,800 

15,332,800 

26,496,700 

1900 

5,578,300 

70,500 

53,573,200 

65  1  ,400 

26,224,200 

1905 
1906 

12,158,800 
13,468,300 

636,000 
754.200 

349,700 
407,700 

1  14,287,200 
120,987,500 

3,140,400 
3,630,300 

19,476,400 
18,354,800 

1907 

15,186,300 

812,800 

444,000 

126,691,500 

3,590,100 

17,31  1,700 

1908 
1891] 

(a) 

(a) 

(a) 

133,000,000 

3,400,000 

1  6,400,000 

to 

1907] 

94,229,000 

3,624,800 

'-735.700 

913,817,800 

18,996,200 

391,615,300 

(a)  Not  yet  published. 


355 


INSURANCE    AGAINST   INVALIDITY   AND   OLD   AGE 

Of  special  interest  is  the  item  of  medical  care.  In  the  five 
years  between  1900-1905  the  cost  of  treatment  rose  from  5,578,300 
marks  ($1,394,575)  to  12,158,800  marks  ($3,039,700)  and  in  1907 
the  figure  reached  15,186,300  marks  ($3,796,575).  This  is  one  of 
the  most  admirable  out-growths  of  the  pension  system.  To  avoid 
having  an  unnecessarily  large  number  of  chronic  invalids  to  sup- 
port, the  insurance  system  has  developed  a  great  preventive  and 
restorative  movement.  Provision  is  made  through  this  agency  for 
many  workingmen  drawing  benefits  from  sickness  insurance  soci- 
eties, but  who,  in  the  opinion  of  the  invalidity  fund  authorities,  are 
likely  soon  to  become  totally  and  permanently  disabled  and  so 
entitled  to  a  pension  unless  they  receive  adequate  care.  Thus 
patients  suffering  with  incipient  tuberculosis  are  sent  to  sanatoria; 
and,  on  the  same  grounds,  special  dental  departments  have  been 
established  throughout  the  country  which  even  supply  artificial 
teeth  free  in  order  to  prevent  disability  that  may  result  from 
malnutrition. 

Thousands  of  cases  are  treated  each  year  and  a  large  per- 
centage of  those  who  ordinarily  would  have  become  permanent 
public  charges  are  either  fully  restored  to  strength,  or  at  any  rate 
enabled  to  do  something  toward  their  own  support.  There  is  at 
present  great  enthusiasm  for  this  system,  and  the  ailing  are  only 
too  eager  to  take  advantage  of  the  opportunities  offered  them,  as 
it  puts  at  their  disposal  medical  treatment,  rest,  food,  shelter, 
clothing,  sanitary  surroundings  and  care  which  otherwise  would  be 
far  beyond  their  means. 

In  addition  to  the  above  pensions  and  other  expenditures, 
there  were  2,219,794  cases  between  1891  and  1908  in  which  all  or 
a  portion  of  the  contributions  were  returned.  The  number  and 
value  of  these  returned  contributions  under  each  head,  are  shown 
in  Table  1 33.  As  might  be  expected,  the  average  value  of  reim- 
bursements is  small.  For  the  year  1907,  returns  to  women  on 
account  of  marriage  averaged  38.44  marks  ($9.61);  because 
of  disabling  accidents  82.76  marks  ($20.69) »  a°d  because  of  death 
85.44  marks  ($21.36). 

As  in  the  case  of  accident  insurance,  a  good  many  appeals 
(see  Table  134)  were  taken  from  the  decisions  of  the  insurance 
institutions  to  the  court  of  arbitration. 

356 


GERMANY 


TABLE    133. — NUMBER  AND  VALUE   OF     CONTRIBUTIONS  RETURNED 
UNDER  OLD  AGE  AND    INVALIDITY    INSURANCE,    1891-1908 


V  »nm 

NUMBER  OF  CASES 

VALUE 

i  ear 

Marriage 

Accident 

Death 

Marriage 
(Marks) 

Accident 
(Marks) 

Death 
(Marks) 

1891 

1895 

8,245 

2,271 

158,600 

60,800 

1900 

156,122 

234 

34.>42 

4,939,000 

1  1,000 

i  ,666,700 

1905 

151,856 

767 

33.951 

5,586,400 

57,200 

2,527,900 

1906 

153,226 

710 

32,829 

5,752,400 

55.5°° 

2,628,400 

1907 

152,470 

6,7 

35,461 

5,804,200 

50,500 

3,000,200 

1908 

151.330 

587 

36,789 

6,100,000 

3,100,000 

1891  } 

to 

1,813,891 

5.477 

400,426 

61,268,200 

.  . 

24,679,000 

1908] 

TABLE  134. — NUMBER  OF  PENSIONS  AND  OF  CONTRIBUTIONS  RE- 
TURNED, AND  NUMBER,  PER  CENT  AND  DISPOSITION  OF 
APPEALS  TO  COURTS  OF  ARBITRATION  UNDER  OLD  AGE  AND 
INVALIDITY  INSURANCE,  1891-1907 


APPEALS  DETERMINED  BY  COURTS 

Prr 

OF  ARBITRATION 

I\!lt>Wll}6f 

Number 

Nuwibw 

M    CJ 

Cent 

Year 

of  Pen- 
sion 

A             J 

Contri- 
butions 

of  Ap- 
peals 

T     L 

of 

Awards 

A  J. 

In  Favor  of 

Awards 

Returned 

/  aken 

Ap- 
pealed 

Total 

Institu- 

Per 

Per 

tions 

Cent 

/  MSUTCd 

Cent 

1891 

163,451 

16,553 

IO.I 

8.477 

5,234 

61.8 

3,243 

38.2 

1895 

104,062 

18,819 

18.1 

13.257 

9.676 

73-o 

3.581 

27.0 

1900 

1  70,946 

1  94,  1  42 

16,835 

9.8 

9-791 

7.567 

2,224 

22.7 

1905 

189,305 

196,392 

25,823 

,3.6 

22,591 

18,878 

83.6 

3.713 

16.0 

1906 

181,249 

197,729 

26,402 

14.6 

24,085 

19,994 

83.0 

4,091 

17.0 

1907 

181,858 

199.265 

25,923 

14.3 

22,183 

18,045 

81.3 

4.138 

18.7 

Great  discontent  prevails  with  regard  to  the  decisions  of 
the  courts  of  arbitration.  In  1907,  for  example,  fully  one-fourth 
of  these  decisions  were  appealed  to  the  Imperial  Insurance  Office. 
In  this  same  year,  however,  over  78  per  cent  of  the  decisions  of  the 
courts  of  arbitration  from  which  appeals  were  taken,  were  con- 
firmed by  the  Imperial  Insurance  Office,  as  Table  135  shows. 

357 


INSURANCE    AGAINST   INVALIDITY  AND  OLD   AGE 


TABLE  135. — TOTAL  NUMBER  OF  APPEALS  AND  NUMBER  AND 
DISPOSITION  OF  THESE  DECIDED  BY  THE  IMPERIAL  INSURANCE 
OFFICE  UNDER  OLD  AGE  AND  INVALIDITY  INSURANCE,  l8oi- 
1907. 


APPEALS 

APPEALS  DECIDED  BY  IMPERIAL  OFFICE 

Year 

By 
Insured 

By 
Institu- 
tions 

Total 

Confirmations 

Complete  or  Par- 
tial Change 

Number 

Per  Cent 

Number 

Per  Cent 

1891 
"895 

632 
2,643 

$ 

555 

3,21  1 

358 
2,303 

64.50 
71.72 

197 

35-5° 
28.28 

1900 

2,691 

423 

3,040 

2,004 

65.92 

1,036 

34.08 

1905 
1906 

5,386 
5.583 

652 

4>5& 
4,788 

3,636 
3.854 

79-6i 
80.49 

931 

934 

20.39 
19.51 

1907 

638 

5  '799 

4.548 

78.43 

1,251 

21.57 

Total  benefits  under  this  act  include  the  pensions  paid 
during  sickness  beyond  26  weeks,  to  invalids,  and  the  aged,  and 
for  the  return  of  premiums  in  case  of  marriage,  accident  and  death. 
These  items,  together  with  the  cost  of  management  expenses  of 
insurance  institutions,  cover  all  disbursements  of  the  pension  sys- 
tem. Table  136  gives  the  various  items  to  the  close  of  1907. 

TABLE    136. — DISBURSEMENTS    FOR  OLD   AGE   AND   INVALIDITY    IN- 
SURANCE,    1891-1907 


y 

ear 

Total  Benefits 
Paid 
(Marks) 

Total\M  anage- 
ment  Expenses 
(Marks) 

Total  Disburse- 
ments 
(Marks) 

1891 
1895 

1900 

1905 

1906 

1907 

1891  to 

1907 

15,299,500 
42,680,700 
92,729,300 
1  58,220,000 
166,039,100 
172,891,300 
1,501,100,400 

3,899-400 
6,063,100 
1  1,244,000 
14,957,200 
16,316,200 
17,358,700 
165,563,400 

19,198,900 
48,743,800 
103,973,200 
173,177,200 
182,355,300 
190,250,000 
1,666,663,800 

Of  special  interest  are  the  figures  under  the  head  of  manage- 
ment expenses.  In  the  first  year  of  operation  (1891),  these  were 
nearly  4,000,000  marks,  or  over  20  per  cent  of  all  disbursements  for 

358 


GERMANY 

that  year.  In  the  next  ten  years,  the  figures  fell  to  9.34  per  cent. 
The  tendency  is  still  in  the  same  direction  and  in  1907  the  total 
cost  of  management  was  about  9.2  per  cent  of  the  disbursements. 
Favorable  as  this  rate  is,  it  should  be  observed  that  it  includes 
such  items  as  the  cost  of  determining  pensions  in  the  first  instance 
and  expenses  of  appeals  to  the  court  of  arbitration.  Exclusive  of 
these,  the  management  expenses  would  be  reduced  in  1907  to  the 
extremely  low  figure  of  7.8  per  cent  of  the  disbursements.  Table 
137  gives  the  items  under  management  expenses. 


TABLE   137. — EXPENSES  OF   MANAGEMENT  IN    DETAIL     UNDER    OLD 
AGE    AND    INVALIDITY    INSURANCE,    1891-1907 


Collection  of 

For  Deter- 

For Courts     Administra- 

Year 

Contributions 

mination  of 

of  Arbitra-         tion  and 

Total 

and  Supervision,     Pensions 

tion 

Management 

(Marks} 

(Marks) 

(Marks) 

(Marks) 

(Marks) 

1891 

1,206,000 

6,900 

257,700 

2,428,800 

3,899,400 

1895 

1,814,600 

221,500 

343,900 

3,683,000 

6,063,100 

1900 

2,975,800 

832,200 

404,000 

7,032,000 

11,244,000 

1905 

3,856,400 

1,539,600 

620,900 

8,940,300 

14,957,200 

1906 

4,296,400 

1,590,000 

685,200 

9,744,600 

16,316,200 

1907 

4,41  1,000 

1,760,500 

689,800 

10,497,400 

17,358,700 

1891  to! 
1907   / 

46,177,400 

1  2,8  1  1,  600 

7,367,900 

99,206,500 

165,563,400 

TABLE    138. — RECEIPTS   IN   DETAIL   UNDER  OLD  AGE  AND   INVALID- 
ITY  INSURANCE,    1891-1907 


Year 

CONTRIBUTIONS  OF 

Interest  and 
other  In- 
come 

(Marks) 

Total 
(Marks) 

Employers 
(Marks) 

Employes 
(Marks) 

State 
(Marks') 

1891 
1895 
1900 
1905 
1906 
1907 
1891  to\ 
1907    / 

46,986,000 
51,360,500 
64,385,200 
80,645,900 
85,063,100 
89,321,600 

1,084,719,500 

46,986,000 
51,360,500 
64,385,200 
80,645,900 
85,063,100 
89,321,600 

1,084,719,500 

6,049,800 
16,933,200 
30,761,800 
47,350,800 
48,557,000 
49,620,600 

485,204,400 

795,900 
13,404,300 
27,538,200 
41,669,300 
44,457,000 
47,528,200 

416,088,100 

100,817,900 
133,058,500 
1  87,070,400 
250,31  1,900 
263,340,800 
275,792,000 

3,070,731,500 

359 


INSURANCE    AGAINST    INVALIDITY   AND   OLD   AGE 

Contributions  of  employers  and  employes  with  the  subsidies 
of  the  state,  provide  the  necessary  funds  for  the  payment  of 
pensions.  Unlike  the  assessment  system  in  accident  insurance, 
contributions  here  consist,  as  we  have  seen,  of  an  average 
"premium"  and  not  merely  enough  to  pay  pensions  currently 
falling  due.  Receipts,  therefore,  more  than  meet  expenses.  Table 
138  on  page  359  gives  the  various  items  of  receipts. 

It  will  be  seen  that  the  amount  of  interest  and  other  income 
is  becoming  larger  every  year.  From  the  excess  of  contributions 
over  disbursements,  aggregate  sums  have  been  set  aside  as  a 
reserve,  as  follows: 

TABLE     139. — AMOUNT    OF     RESERVE     FUNDS    ON     DECEMBER      31, 
UNDER  OLD   AGE  AND  INVALIDITY   INSURANCE,    1891-1907 

Amount  of  Reserve 

Year  (Marks) 

1891 81,619,100 

1895 413,145,400 

1900 845,759,100 

1905 1,237,540,200 

1906 1,318,525,600 

1907 1,404,067,700 

While  large  in  the  aggregate,  there  is  no  pretense  that  these 
reserves  are  as  large  as  would  be  required  under  a  voluntary 
annuity  and  insurance  system. 

Under  the  law,  at  least  50  per  cent  of  the  fund  must  be  in- 
vested as  a  trust  fund,  and  as  such  investments  yield  small  returns 
the  department  realizes  only  3  per  cent.  The  remainder  is,  as  far 
as  possible,  invested  in  loans  and  mortgages  to  associations  or- 
ganized for  building  workingmen's  homes  and  apartments,  to 
be  sold  to  them.  A  considerable  sum  also  was  loaned  in  Berlin 
to  the  labor  unions  to  erect  an  administration  building.  This, 
together  with  other  similar  transactions,  has  tended,  in  part,  to 
ease  the  opposition  of  the  social  democracy.  There  is,  however, 
a  strong  tendency  to  dispense  with  the  reserves,  as  unnecessary 
in  view  of  the  compulsory  character  of  the  law.  The  German 
government  has,  moreover,  many  millions  of  the  indemnity  ob- 
tained from  France  for  the  war  of  1871,  which,  when  no  longer 
required  for  pensions  to  veterans  who  became  invalided  in  the 
war,  will  eventually  be  transferred  to  the  invalidity  fund. 

360 


AUSTRIA 
AUSTRIA 

With  the  exception  of  miners  and  employes  in  offices  (Privat 
Beamten)  Austrian  workingmen  do  not  as  yet  enjoy  the  bene- 
fits of  an  old  age  and  invalidity  insurance  law.  At  the  present 
time,  however,  as  a  result  of  the  pressure  brought  by  working- 
men's  organizations,  a  comprehensive  measure  is  ready  for  presen- 
tation to  Parliament.  This  is  a  part  of  the  general  reform 
project  of  workingmen's  insurance,  fully  described  later.  * 

Provision  for  miners  dates  back  to  May  23,  1854,  when 
mine-owners  were  obliged  to  create  special  societies  (Bruderladen) 
for  employes,  or  to  arrange  with  others  for  the  formation  of  joint 
societies.  These  provided  benefits  in  case  of  sickness,  accident, 
or  invalidity  whether  from  old  age  or  other  causes.  As  a  result 
of  a  fundamental  weakness  in  this  plan,  these  societies  constantly 
presented  deficiencies.  The  government,  therefore,  as  early  as 
1872  attempted  to  pass  a  reform  measure.  Nothing  was  accom- 
plished until  July  28,  1889,  when  a  law  was  passed  for  the  purpose 
of  regulating  mine-owners'  associations  on  lines  similar  to  those 
of  other  industries. 

According  to  this  law,  each  society  must  have  two  funds, 
separately  administered;  one  for  the  payment  of  sick  and  funeral 
benefits  and  another  for  that  of  pensions  to  members  incapacitated 
through  sickness,  accident  or  old  age,  as  well  as  to  widows  and 
orphans  of  deceased  members.  Sick  and  funeral  benefits  paid 
by  the  sickness  branch  of  the  fund  must  not  be  less  than  benefits 
provided  under  the  general  sickness  insurance  law  in  the  case  of 
working  people  engaged  in  other  trades.  Annuities  must  not  be 
less  than  $41.66  for  men  and  $20.83  f°r  women  members.  The 
widow  of  a  deceased  member  is  to  receive  an  annuity  payable 
until  re-marriage  or  death,  of  at  least  one-third  of  the  pension  due 
her  husband;  each  legitimate  child  up  to  the  completion  of  his 
or  her  fourteenth  year,  an  annuity,  if  the  father  only  is  dead,  of 
at  least  one-sixth,  or  if  both  parents  are  dead,  one-third  of  the 
pension  which  the  deceased  father  was  receiving,  or  which  he 
could  have  claimed  had  he  been  permanently  invalided.  Combined 
pensions  of  widow  and  children  must  not,  however,  exceed  three- 

*  See  Chapter  XIX,  Reform  Project  in  Austria,  page  414. 
361 


INSURANCE   AGAINST   INVALIDITY   AND   OLD   AGE 

fourths  of  that  which  the  deceased  member  would  have  received. 
Funds  needed  to  enable  societies  to  fulfill  their  obligations  under  this 
law  are  provided  by  equal  contributions  from  employers  and  em- 
ployed, except  in  the  case  of  employes  receiving  over  $500  a  year, 
who  must  bear  the  whole  expense  themselves.  Both  the  sickness 
and  pension  branches  must  accumulate  reserve  funds,  the  amount 
being  regulated  according  to  principles  laid  down  in  the  law. 

The  law  for  employes  in  offices  (Privat  Beamten)  is  a 
step  in  an  entirely  new  direction  for  obligatory  insurance.  It 
was  passed  December  n,  1906,  and  has  been  in  operation  only 
since  the  beginning  of  1909.  It  provides  against  invalidity  and 
old  age  and  grants  pensions  to  widows  and  orphans  of  office  em- 
ployes, clerks  and  other  salaried  employes.  These  classes,  neg- 
lected by  the  government  in  its  earlier  legislation  against  sickness 
and  accident,  made  a  strong  claim  for  an  invalidity  and  old  age 
insurance  law.  For  political  reasons,  as  well  as  because  of  the 
ease  with  which  such  a  law  could  be  applied  to  this  relatively 
higher  economic  class,  the  measure  was  allowed  to  pass,  even 
before  a  general  old  age  pension  law  was  put  into  operation. 

All  office  employes  between  the  ages  of  eighteen  and 
twenty-five  whose  annual  earnings  are  between  600  kronen  ($120) 
and  3000  kronen  ($600)  are  obliged  to  insure.  Those  having 
salaries  over  3000  kronen  are  insured  for  this  amount  only,  and 
the  few  whose  wages  fall  below  600  kronen  are  classed  with 
workingmen  proper  for  whom  the  other  invalidity  law  is  being 
planned.  A  distinction  is  thus  made  between  those  engaged  in 
purely  physical  labor  and  those  occupied  in  work  chiefly  mental. 

TABLE    140. — WAGE   CLASSIFICATION    OF  INSURANCE   AGAINST  INVA- 
LIDITY AND  OLD  AGE 
Wage  Class 


Per  day 

Per  week 

Per  month 

(Kronen) 
Up  to    .80 
0.81  to  i.  60 
i  .6  1  "  2.40 

(Kronen) 
Up  to  4.80 
4.81   to  9.60 
9.61    "  14.40 

(Kronen) 
Up  to  20 
21    to  40 
41     "   60 

2.41   "  4.00 

14.41    "  24.00 

61     "  100 

4.01   "  6.00 
above    6.00 

24.01    "  36.00 
above    36.00 

101     "  150 
above  i  50 

This  law  is  extremely  conservative.     A  waiting   period  of 
1 20  contributory  months  is  fixed  for  invalidity  pensions,  as  well 

362 


AUSTRIA 

as  for  pensions  of  widows  and  orphans.  For  old  age  pensions, 
the  period  is  480  contributory  months.  This  is  considered  too 
long  and  will  in  all  probability  be  cut  down.  For  purposes  of 
determining  benefits  as  well  as  fixing  rates  of  premium,  the  em- 
ployes are  divided  into  six  classes  as  shown  in  Table  140. 

Invalidity  pensions  are  composed  of  two  parts.  The  first, 
known  as  the  basic  sum  (Grund)  varies  with  the  class  of  the 
insured  from  180  kronen  ($36)  in  Class  I  to  900  kronen  ($180) 
in  Class  VI.  The  second  sum,  looked  upon  as  a  bonus,  begins 
with  the  end  of  the  waiting  period  and  varies  with  the  class  to 
which  the  insured  belongs  during  the  period  between  the  close  of 
the  waiting  time  and  that  of  invalidity.  The  old  age  pension  is 
of  the  same  nature  and  is  paid  upon  reaching  the  limiting  age,  at 
the  end  of  the  longer  waiting  period,  without  the  necessity  for 
showing  incapacity.  Widows  receive  one-half  the  pension  which 
the  husband  would  have  enjoyed.  Orphans  receive  one-third  in 
case  of  the  death  of  one  parent  and  two-thirds  for  both  parents, 
but  the  sum  of  all  pensions  to  survivors  must  not  exceed  the 
maximum  for  the  man  himself.  Should  the  total  pension  be  twice 
as  great  as  the  basic  sum  to  which  the  deceased  was  entitled  after 
paying  for  120  months  the  amount  may  be  settled  by  one  pay- 
ment. If  death  ensues  during  the  waiting  period,  the  widow  and 
orphans  receive  a  settlement  instead  of  a  pension. 

In  the  preparation  of  this  measure,  the  government  took 
precaution  that  rates  should  be  adequate.  Those  proposed  by 
the  Minister  of  the  Interior  were  accordingly  made  sufficiently 
high  to  insure  a  large  surplus  which  the  management  hopes  to 
apply  to  the  increase  of  the  present  low  guaranteed  benefits, 
The  four  lower  classes  of  employes  pay  one-third  the  premium, 
employers  paying  the  balance.  In  the  two  upper  classes  employer 
and  employe  each  pay  half.  Those  who  enjoy  an  income  over  7200 
kronen  (11440)  pay  the  entire  premium  themselves.  Premiums  are 
on  the  capitalized  value  plan,  and  average  from  6  to  30  kronen 
($1.20  to  $6.00)  monthly,  depending  on  the  class.  The  only 
state  contribution  is  that  of  100,000  kronen  (f 20,000)  yearly,  for 
management  expenses.  Administration  is  in  the  hands  of  a 
central  pension  office  in  Vienna,  and  a  general  assembly  of  rep- 
resentatives of  employers  and  employes  in  the  same  proportion 
the  chairman  being  appointed  by  the  state. 

363 


INSURANCE   AGAINST    INVALIDITY   AND   OLD   AGE 

The  law  also  permits  employers  to  establish  independent 
organizations,  "Ersatz-instituten"  as  they  are  called,  in  their  re- 
spective establishments,  provided  these  meet  the  requirements  of 
the  law  and  give  at  least  the  same  minimum  benefit  as  the  central 
institution.  A  sufficient  reserve  must  be  maintained  and  unless 
there  is  a  very  strong  guarantee  of  soundness,  a  bond  equal 
to  the  reserve  is  required  from  the  employer.  Such  an  "  Institute" 
has  been  established  by  a  large  company  in  Prague  engaged  in  the 
iron  industry.  These  bodies  are  all  under  jurisdiction  of  the 
Minister  of  the  Interior. 

At  the  present  time,  in  view  of  the  short  period  the  statute 
has  been  in  force,  it  is  impossible  to  give  any  statistics  of  results. 
It  is  clear,  however,  from  the  character  of  the  law  that  a  consider- 
able number  of  difficulties  will  arise  in  its  administration.  It  will 
be  difficult,  for  example,  to  determine  with  accuracy  which  per- 
sons come  under  its  provisions  and  which  do  not.  Thus, 
book-keepers  are  in  all  likelihood  insurable;  ordinary  salesmen  in 
stores,  probably  not.  It  is  on  this  ground  that  the  Social  Demo- 
cratic party  has  opposed  the  measure  from  the  very  beginning, 
its  objection  being  that  a  distinction  is  made  between  salaried 
men  and  wage-earners.  This  party  demands  one  law  for  all. 


364 


INSURANCE  AGAINST  UNEMPLOYMENT 


XV 
INSURANCE  AGAINST  UNEMPLOYMENT 

A  element  of  economic  loss,  both  to  the  community  and 
to  the  individual,  not  covered  by  compensation  for  the 
consequences  of  industrial  accidents,  or  by  insurance 
against  sickness  or  invalidity,  arises  from  want  of  employment. 
Losses  from  unemployment  vary  greatly  from  year  to  year.  In 
fact,  there  is  a  factor  at  work,  the  complete  nature  of  which  has 
not  yet  been  revealed,  that  causes  this  kind  of  loss  to  come  in 
cataclysms  like  conflagration  losses  in  fire  insurance  or  losses  of 
property  occasioned  by  volcanic  eruptions  or  earthquakes.  This 
fact  has  made  it  so  difficult  to  provide  against  such  misfortunes, 
that  anything  like  adequate  protection  has  in  all  countries  been 
deferred  until  other  kinds  of  workingmen's  insurance  shall  have 
been  developed. 

Another  difficulty  immediately  encountered  when  an  effort 
is  made  to  deal  with  this  subject,  is  that  at  the  very  time  pressure 
upon  the  community  on  account  of  unemployment  is  greatest, 
the  middle  classes,  and  those  who  represent  large  aggregations  of 
capital  as  well,  are  in  a  condition  of  prostration  and  less  able  than 
in  ordinary  times  to  respond  to  a  demand  for  special  contributions. 
These  two  facts:  (i)  that  the  hazard  involves  a  cataclysmic 
risk,  as  well  as  the  more  or  less  regular  and  stable  one  due  to  in- 
dividual conditions;  and  (2)  that,  when  there  is  widespread  un- 
employment, there  is  also  widespread  financial  distress,  greatly 
complicate  dealing  with  this  subject  and  indicate  the  necessity  for 
proceeding  with  great  caution.  At  the  same  time,  these  facts 
emphasize  its  importance.  If,  through  the  study  of  some  system 
of  compensation  for  unemployment  or  insurance  against  it,  the 
causes  that  lead  to  it  could  be  laid  bare,  and  means  of  prevention 
discovered,  a  most  valuable  economic  service  would  be  performed. 
Insurance  against  unemployment,  in  the  form  of  "out  of 

367 


INSURANCE  AGAINST  UNEMPLOYMENT 

work  pay,"  as  found  in  the  guilds  of  the  middle  ages,  persists 
in  the  trade  unions  of  today,  and  also,  in  a  greatly  diminished 
degree,  in  some  of  the  voluntary  friendly  societies.  In  these  latter 
it  has  been  associated  with  "sick  pay";  but  the  amount  allowed 
has  usually  been  smaller  than  "sick  pay"  and  frequently  a  large 
element  of  discretion  has  been  vested  in  the  management  as  to 
whether  an  allowance  should  be  made  or  not.  Moreover,  it  has 
usually  been  specified  in  the  rules,  when  such  sums  are  allowed, 
that  they  are  to  be  paid  only  out  of  funds  collected  for  this  purpose. 
The  result  is  that  when  unemployment  is  widespread,  most  of 
these  funds  in  local  friendly  societies,  or  in  the  branches  of  affiliated 
friendly  societies,  are  treated  as  charity  funds.  Distribution  is 
made  only  to  members  whose  families  are  in  the  most  serious 
distress,  and  then  in  sums  determined  more  by  their  requirements 
than  by  any  fixed  rules  or  based  upon  the  contributions  of  the 
respective  claimants. 

In  trade  unions,  a  condition  of  depletion  often  results  from 
widespread  unemployment,  and  leads  to  similar  reductions  in 
the  amount  of  provision  per  member,  or  to  a  similar  exercise  of  the 
right  of  discretion  in  distributing  the  funds.  In  the  trade  unions, 
however,  it  may  happen  that,  at  a  period  of  cessation  of  industries 
resulting  in  general  unemployment,  a  large  fund  is  on  hand  and 
very  material  assistance  can  be  rendered  to  members  thrown  out 
of  employment.  This  condition  of  the  treasury  is  sometimes  due 
to  another  and  peculiar  feature,  which  may  seriously  endanger  the 
success  of  unemployment  insurance  as  it  is  now  provided  by  the 
unions.  Frequently  contributions  collected  from  members  as  pro- 
vision against  involuntary  unemployment  are  not  kept  separate 
from  those  received  as  a  strike  fund  to  be  used  in  supporting  mem- 
bers when  on  strike  or  "lock  out."  The  presence  of  a  large  accu- 
mulation of  money  in  a  strike  and  unemployment  fund  is  of  itself 
a  temptation  to  threaten  to  strike,  operating  most  potently  when 
there  has  been  a  long  period  of  prosperity  with  consequent  small 
pressure  upon  the  funds.  This  is  likely  to  exhaust  the  sums 
which  should  be  on  hand  to  meet  the  extraordinary  demands 
in  times  of  a  financial  panic  and  industrial  depression.  It  is 
true,  also,  that  a  panic  usually  follows  periods  of  extraordinary 
apparent  prosperity  during  which  employes  are  likely  to  go  on 

368 


INSURANCE   AGAINST   UNEMPLOYMENT 

strike  for  higher  wages,  shorter  hours,  or  other  improvements  of 
the  conditions  of  the  wage  contract. 

It  therefore  happens  in  some  cases  that  the  provision  made 
by  labor  unions  for  unemployment  fails  at  the  very  moment  when 
it  is  most  needed.  Moreover,  this  insurance  is  only  offered  to 
members  of  trade  unions.  While  in  most  highly  developed  indus- 
trial countries  the  unions  embrace  a  large  proportion  of  skilled 
workmen,  they  contain  relatively  few  unskilled  workmen, 
municipal  and  agricultural  laborers,  employes  in  stores  and  offices 
and  the  like.  Consequently,  this  leaves  a  large  proportion  of 
those  dependent  upon  wages  unprotected.  It  is  precisely  the 
unskilled  workmen  who,  because  of  small  wages,  have  most  need 
of  this  kind  of  insurance,  and  particularly  those  who,  on  account  of 
immaturity  or  approaching  old  age,  receive  minimum  wages  and 
are  consequently  unable  to  provide  accumulations  of  savings. 

Interest  has  been  taken  in  this  subject  of  provision  against 
unemployment  by  four  separate  and  distinct  classes  of  people; 
the  employes  themselves,  local  governmental  officials,  state 
authorities  and  employers.  The  interest  of  employers  has  been 
very  slight.  It  is  thought  that  there  are  distinct  industrial  advan- 
tages to  them  in  having  a  considerable  number  of  unemployed;  it 
helps  to  keep  down  wages,  prevents  complete  unionization  of 
workingmen,  and  in  general  enables  employers  to  make  better 
terms.  This  might  not  be  of  great  importance,  were  it  not  for  the 
different  standards  of  living  in  different  countries  and  the  fact 
that  many  employers  compete  in  the  world's  market.  Under 
existing  conditions  it  undoubtedly  does  make  a  considerable 
difference. 

Moreover,  while  the  knowledge  that  workingmen  were  in- 
jured during  their  employment,  or  killed  by  industrial  accidents, 
or,  after  serving  for  a  long  term  of  years,  were  disabled  or  died 
from  old  age  or  disease,  leaving  a  dependent  family,  has  often  made 
a  strong  appeal  to  employers,  the  case  of  unemployment  has  pre- 
sented no  such  appeal.  On  the  contrary,  in  many  cases  unemploy- 
ment has  been  due  to  discharge  for  failure  to  fulfill  an  employer's 
idea  of  competence,  or  diligence,  and  not  infrequently  to  strikes 
or  lockouts  in  which  employers  on  the  one  side  and  employes  on 
the  other  have  been  engaged  in  a  bitter  struggle.  As  has  been 

24  F  369 


INSURANCE    AGAINST   UNEMPLOYMENT 

stated,  when  it  has  been  due  to  general  conditions  of  panic  or 
stagnation  in  a  special  trade  or  industry,  the  employer  has  suf- 
fered as  well  as  his  employes.  In  the  last-mentioned  case,  many 
employers,  chiefly  from  self-interest  keep  their  forces  of  working- 
men  together,  though  this  is  done  also  in  part  from  the  altruistic 
purpose  of,  as  far  as  possible,  providing  them  with  the  means  of 
support.  They  have  parceled  out  their  work  during  hard  times 
and  have  run  their  industries  only  a  certain  number  of  days  per 
week,  instead  of  having  discharged  a  large  proportion  of  employes. 
This  is  the  only  important  way  in  which  the  employer,  from  what- 
ever motive,  has  made  voluntary  provision  for  the  support  of 
workmen  during  unemployment. 

The  state,  on  the  other  hand,  has  many  very  obvious  inter- 
ests in  the  matter.  In  the  first  place,  there  is  the  pressure  upon 
the  poor  rates.  Worse  than  this,  workingmen  and  their  families 
who  up  to  the  time  of  loss  of  work  have  been  self-supporting  and 
independent,  are  often  pauperized  by  being  given  this  kind  of 
assistance.  It  is  also  believed  that  the  creation  of  bodies  of  tramps 
and  ne'er-do-wells  has  been  due  chiefly  to  periodic  cataclysms  of 
unemployment,  transforming  men  who  were  previously  self- 
respecting  into  parasites,  broken  in  spirit  and  never  afterward  of 
any  real  service  or  capable  of  self-support. 

The  interest  of  the  local  government  bodies  is  usually 
much  greater  even  than  that  of  the  state,  because  in  all 
countries  poor  rates  are  chiefly  levied  and  distributed  locally. 
Densely  populated  industrial  communities  sometimes  find  pres- 
sure upon  the  funds  raised  by  taxation  for  purposes  of  public 
charity  so  great  during  times  of  industrial  depression,  that  they 
are  not  able  to  cope  with  the  situation.  In  such  communities 
employers  shift  the  burden  much  more  readily  than  do  those 
in  agricultural  sections.  Farmers  will  keep  their  laborers 
during  critical  periods,  perhaps  out  of  necessity,  perhaps  out  of 
motives  of  charity;  and  while  there  may  be  a  diminution  in 
the  number  of  domestic  servants  they  too  are  retained,  if 
possible,  even  under  difficulties.  The  same  is  true,  though  in  a 
less  degree,  of  employes  in  stores  and  offices;  but  in  the  trades 
and  particularly  in  building  trades  and  the  like,  where  operations 
actually  come  to  a  stop  or  are  greatly  reduced,  there  is  no  choice 

37° 


INSURANCE    AGAINST   UNEMPLOYMENT 

but  to  throw  the  men  out  of  work.  Consequently  certain  com- 
munities, where  manufacturing  or  construction  trades  are  cen- 
tered, necessarily  suffer  most  severely  during  such  times. 

Pressure  is  increased  also  by  the  tendency  of  those  tempo- 
rarily thrown  out  of  work  in  the  smaller  towns  to  drift  to  the  large 
centres.  The  very  first  effect  of  a  panic  is  to  send  men  to  the  cities. 
This  is  due  to  many  causes,  chief  of  which  is  the  belief  of  working- 
men  that  they  have  a  better  chance  to  get  work  where  it  is  known 
that  work  exists,  even  though  there  are  many  applicants,  than  to 
obtain  it  where  it  is  scarce  though  applicants  are  few.  Undoubt- 
edly the  wholesale  provision  made  in  large  communities  for  the 
support  of  unemployed  workingmen  and  their  families,  though  on 
an  exceedingly  inadequate  scale,  is  of  itself  an  attraction.  Self- 
respect  is  not  so  quickly  broken  down  as  in  a  small  community 
where  all  the  neighbors  know  if  one  is  thrown  upon  public  charity. 
The  tendency  to  gregariousness,  likewise,  in  times  of  trouble  and 
peril  drives  men  together. 

Local  governments  are  greatly  interested  in  these  problems; 
so  it  is  not  strange  that  a  beginning  in  the  matter  of  providing 
insurance  against  unemployment  has  already  been  made  in  com- 
munes and  municipalities,  as  for  instance,  in  Munich,  Cologne, 
Amsterdam,  and  Ghent,  each  of  which  is  well-known  as  an  experi- 
ment station  in  protection  of  this  nature.  The  experiments  vary 
in  method  and  are  of  sufficient  importance  to  be  considered  separ- 
ately. The  following  pages,  therefore,  will  be  devoted  to  a  dis- 
cussion of  some  conspicuous  attempts,  municipal  and  state,  to 
cope  with  the  problem.  Fuller  details  of  these  systems  grouped 
by  countries  will  be  found  at  the  conclusion  of  this  section. 

In  Munich  the  municipality  conducts  an  employment  agency, 
access  to  which  is  given  to  each  member  of  the  community,  where 
earnest  effort  is  made  to  provide  employment  for  every  person 
applying.  Thoroughly  popular  in  character,  these  efforts  have 
been  remarkably  successful  and  the  efficiency  of  this  branch  of 
the  local  government  is  everywhere  acknowledged. 

Activity  of  a  very  different  type  is  to  be  found  in  Cologne 
where  an  employment  insurance  fund  has  been  created,  partly 
through  private  donations,  partly  by  a  subvention  from  the  munici- 
pality and  partly  by  contributions  of  workingmen  who  desire  to 


INSURANCE    AGAINST   UNEMPLOYMENT 

be  insured.  Insurance  is  entirely  voluntary  and  is  extended  to 
all  classes  of  workingmen.  The  amount  of  daily  compensation  is 
the  same  without  regard  to  the  earning  power  and  is  fixed  at  a 
very  small  sum,  barely  sufficient  for  the  most  meager  sustenance 
of  the  workingman  himself,  with  little  if  any  available  for  his 
family.  In  other  words,  it  supplements  but  does  not  entirely 
replace  poor  relief.  The  insurance  benefit  is  payable  only  in 
case  the  workingman  has  been  a  contributor  to  the  fund  for  some 
months.  He  must  have  had  the  forethought  to  make  such  provi- 
sion and  cannot,  on  the  eve  of  becoming  unemployed,  get  in  a 
claim  against  the  fund  by  making  one  or  two  contributions. 
The  administration  of  the  fund  is  acknowledged  to  be  very  suc- 
cessful, and  it  is  said  that  a  much  more  than  proportionate  relief 
of  the  poor  rates  has  been  the  result.  At  the  same  time,  only  a 
small  percentage  of  the  workingmen  of  Cologne  are  thus  pro- 
tected. 

In  Amsterdam,  a  more  elaborate  system  has  been  evolved. 
There  insurance  is  strictly  through  and  in  connection  with  trade 
unions,  and  is  available  for  their  members  only.  This  is  possible, 
because  in  Holland  nearly  all  workingmen,  both  skilled  and  un- 
skilled, are  federated  in  unions,  so  that  the  discrimination  is  by 
no  means  so  great  as  might  at  first  appear.  The  municipality  has 
limited  the  amount  it  will  contribute  in  three  ways:  first,  to  a 
certain  moderate  aggregate;  second,  to  a  certain  amount  granted 
each  trade  union  adopting  this  insurance  system,  based  on  mem- 
bership in  the  union;  and  third,  to  a  sum  not  exceeding  contribu- 
tions made  by  the  men  themselves.  Wherever  a  trade  union 
accepts  the  provisions  of  the  scheme,  the  board  which  has  control 
of  the  subvention  is  given  authority  to  supervise,  to  approve  or 
disapprove  by-laws  and  amendments  thereto,  and  generally  to 
regulate  the  conduct  of  the  union  in  relation  to  the  fund.  There 
is,  however,  no  requirement  that  a  trade  union  shall  admit  persons 
not  members,  even  though  of  the  same  trade,  to  participate  in 
the  benefits  of  this  insurance.  The  amount  and  duration  of  the 
benefit  is  subject,  likewise,  to  the  determination,  within  certain 
limits,  of  the  board  entrusted  with  the  administration  of  the  law. 
Special  provisions  are  made  in  the  case  of  seasonal  employments, 
such  as  carpentry,  and  the  building  trades  generally,  in  order  that 

372 


INSURANCE   AGAINST   UNEMPLOYMENT 

the  funds  may  not  be  charged,  without  sufficient  contribution 
being  made  for  that  purpose,  with  the  support  of  workingmen  in 
such  occupations  during  the  portions  of  each  year  when,  under 
the  usual  conditions  of  the  trade,  unemployment  is  to  be  expected. 
The  system  has  been  sufficiently  successful,  although  on  a  compara- 
tively small  scale,  so  that  it  has  been  extended  to  many  other  com- 
munities of  Holland,  such  as  Utrecht  and  The  Hague. 

The  most  interesting  developments  of  unemployment  insur- 
ance along  purely  voluntary  lines,  though  assisted  by  subsidies  from 
the  government,Jiave  been  in  Belgium,  Denmark  and  Norway.  In 
the  last  mentioned  country,  however,  the  development  to  this 
day  is  one  rather  of  law  than  of  practice. 

In  Belgium,  commencing  with  the  municipality  of  Ghent 
and  extending  through  many  municipalities  of  the  country,  a  sys- 
tem of  subsidized  unemployment  insurance  has  been  inaugurated. 
This  system  is  carried  on  in  connection  with  the  trade  unions  and 
is  open  to  all  the  workingmen  of  the  community.  Membership  is 
not  compulsory  but  is  so  strongly  encouraged  that  a  large  pro- 
portion are  insured.  Contributions  to  the  funds  are  made  by  the 
insured,  the  community  and  the  state.  From  these  funds,  under 
conditions  determined  by  the  governing  board,  provision  is  made 
in  the  most  economical  way  for  the  support  of  unemployed  work- 
ingmen and  their  families.  The  Belgian  government  desires  to 
extend  and  amplify  this  system,  in  view  of  the  great  benefits  which 
have  been  secured  in  communities  where  it  has  been  fully  estab- 
lished. It  has  therefore  passed  a  law,  calling  for  the  interrogation 
of  the  authorities  wherever  it  has  not  been  introduced,  inquiring 
why  this  is  the  case.  The  commission  making  the  inquiry  has 
power  to  offer  governmental  assistance  and  generally  to  encourage 
and  support  such  schemes  when  inaugurated. 

In  Denmark,  greater  progress  has  been  made,  although  the 
scheme  has  not  been  in  operation  for  so  long  a  time.  There  the 
subsidy  is  solely  from  the  general  government.  At  the  outset  it 
was  fixed  at  250,000  crowns  ($67,500)  per  annum,  with  a  clear 
understanding  that  if  it  appeared  to  be  acceptable  that  the  propor- 
tionate contribution  of  the  government  should  be  larger,  the  fact 
would  be  received  not  with  dissatisfaction  but  with  special  satis- 
faction, and  an  appropriation  to  make  good  the  deficiency  would 

373 


INSURANCE    AGAINST    UNEMPLOYMENT 

be  voted  promptly.  This  plan  is  the  special  proposal  of  a  former 
chief  supervisor  of  the  Danish  friendly  societies,  who  for  a  long 
period  of  years  has  possessed  the  confidence  of  the  officers  and 
members  of  the  trade  unions  of  Denmark.  As  in  Holland,  trade 
unions  embrace  a  very  large  proportion  of  the  workingmen, 
whether  skilled  or  unskilled.  The  Danish  scheme  is  substantially 
as  follows:  The  organization  and  management  of  the  unemploy- 
ment fund  are  in  each  case  entrusted  to  the  trade  union.  If  it 
desires  to  add  the  insurance  feature,  the  union  with  the  approval 
of  the  supervisor  fixes  the  amount  of  contribution  for  each  mem- 
ber, and  he  is  obliged  to  pay  this  sum,  thereby  becoming  entitled  to 
the  benefits  of  unemployment  insurance.  The  option  is  given  to 
every  workingman  of  the  same  trade  or  occupation,  not  a  member 
of  the  union,  to  come  in  for  employment  insurance  and  to  contribute 
at  the  same  rate  as  the  members  of  the  union.  Since  the  union  is 
to  pay  all  expenses  of  administration,  such  a  person  must  make  a 
contribution,  also,  toward  these,  the  amount  of  which  must  be 
approved  by  the  supervising  officer.  It  appeared  unlikely,  at 
first,  that  labor  unions  would  consent  to  admit  non-union  work- 
ingmen to  the  benefit  of  unemployment  insurance,  thus  put  under 
their  management  and  control.  This,  however,  has  not  proved 
to  be  the  case.  It  is  believed  that  the  favorable  attitude  of  the 
Danish  trade  unions  is  due  to  two  things;  first,  the  thorough  union- 
ization of  the  country ,which  leaves  little  to  be  feared  from  unorgan- 
ized workingmen  whom  it  is  the  policy  to  convert  to  the  advantages 
of  unionism;  and  second,  the  confidence  in  the  disinterestedness, 
wisdom  and  ability  of  the  former  supervisor  of  friendly  societies 
now  charged  with  the  administration  of  this  scheme.  Whatever 
the  cause,  it  is  the  opinion  of  labor  leaders  that  the  plan  now  in 
operation  has  not  had  a  disintegrating  effect  nor  loosened  the 
unions'  hold  upon  their  members.  On  the  contrary,  by  bringing 
non-union  men  in,  it  has  greatly  encouraged  them  to  join  the  unions. 
A  law  similar  to  that  in  Denmark  has  been  passed  in  Norway, 
it  having  been  introduced  upon  the  suggestion  of  a  professor  of 
Christiania  University,  though  the  administration  of  the  measure 
was  necessarily  entrusted  to  other  hands.  While  deserving  great 
credit  for  his  activity  in  public  affairs,  the  distinguished  pro- 
fessor had  not  the  confidence  of  union  workingmen  sufficiently  to 

374 


INSURANCE    AGAINST   UNEMPLOYMENT 

enable  him  to  quiet  their  suspicions  and  fears.  In  consequence, 
the  difficulty  of  administering  the  Norwegian  fund  in  this  way  has 
been  insurmountable,  and  the  law  has  been  virtually  a  dead  letter, 
the  unions  being  unwilling  to  admit  to  the  benefits  of  the  unem- 
ployment fund,  persons  of  the  same  trade  or  occupation  who  are  not 
members.  They  prefer  to  go  without  the  very  liberal  state  subsidy, 
rather  than  loosen  the  bond  of  union,  diminish  the  inducement  to 
become  and  remain  members,  and  expose  the  organizations  to  the 
danger  of  disintegration  which  they  believe  would  attend  any  such 
action  on  their  part.  The  explanation  is  in  part  political.  In  both 
Norway  and  Denmark,  as  in  most  European  countries,  members  of 
trade  unions  are  Social  Democrats  politically,  and  realize  that  soli- 
darity on  the  part  of  the  workingmen  calls  for  their  standing  together 
at  the  polls  and  assisting  to  elect  representatives  in  Parliament  who 
will  look  out  for  their  special  interests.  In  Denmark  this  attitude  is 
generally  accepted,  the  Social  Democratic  party  there  being  about 
as  strong  relatively  as  in  Germany.  In  Norway,  which  is  much 
less  developed  industrially  and  where  factories  are  less  common, 
the  organization  of  the  Social  Democratic  party  has  been  more 
recent,  and,  as  in  the  United  States,  is  attended  with  much  greater 
hostility  on  the  part  of  employers  and  of  other  members  of  the 
community  than  in  most  of  the  better  developed  industrial  coun- 
tries of  the  continent.  There  are  accordingly  fears  and  suspicions 
in  Norway,  that  the  introduction  of  any  system  which  would 
cause  the  labor  union  to  treat  all  persons  of  the  same  occupation 
as  entitled  to  equal  privileges,  would  tend  to  break  down  the 
union  itself  and  thereby  injure  the  prospects  of  the  Social  Demo- 
cratic party.  At  the  same  time,  the  experience  of  Denmark,  so 
decidedly  to  the  contrary,  will  perhaps  be  accepted  ultimately 
in  those  occupations  at  least  in  which  the  unions  are  the 
strongest. 

In  other  countries  of  Europe  there  have  been  sporadic  at- 
tempts to  deal  with  unemployment  but  so  far  without  any  such 
measure  of  success  as  has  been  described. 

The  most  radical  proposal  to  treat  the  subject  on  a  large 
scale  comes,  not  from  any  of  the  countries  mentioned,  but  from 
Great  Britain,  where  the  government  now  proposes  compulsory 
insurance  against  unemployment,  to  be  applied  first  to  a  limited 

375 


INSURANCE   AGAINST   UNEMPLOYMENT 

number  of  occupations.  The  suggestion  is  as  follows:  Contribu- 
tions to  an  unemployment  fund  are  to  be  made  by  the  employe 
and  the  employer  in  equal  amounts.  The  government  is  also  to 
contribute  and  likewise  virtually  to  guarantee  the  sufficiency  of  the 
fund.  From  this,  a  small  daily  wage  during  unemployment  will, 
under  certain  precautions,  be  granted  to  each  workingman  who  has 
contributed.  It  is  proposed  that  the  method  of  collecting  the 
contribution  be  the  same  as  in  insurance  against  invalidity  in  Ger- 
many. Stamps  will  be  sold  by  the  government.  It  will  be  the 
duty  of  every  employer  to  see  that  each  person  employed 
by  him  has  a  book,  showing  that  he  is  insured  against  unemploy- 
ment; and  it  will  also  be  the  duty  of  the  employer  to  deduct 
from  the  employe's  wages  the  amount  necessary  for  the  purchase 
of  the  stamps  due  and  to  affix  them  to  the  book,  together  with 
an  equal  number  paid  for  by  himself.  The  government  besides 
administering  the  fund  is  to  contribute  a  substantial  amount 
from  the  general  budget  each  year. 

For  the  purposes  of  administration,  Great  Britain  is  to  be 
divided  into  ten  districts,  in  each  of  which  there  will  be  a  board 
charged  with  the  administration  of  the  fund  and  the  execution 
of  the  law.  There  will  be  a  number  of  branch  offices  also,  in  each 
district,  and  in  London  a  general  government  supervisory  board. 
It  is  anticipated  that  the  surplus  funds  of  each  district  will  be 
available  to  cover  deficiencies  in  the  others.  In  connection 
with  the  administration,  each  governmental  office  will  be  an  em- 
ployment agency,  assisting  employes  to  find  work  and  employers 
to  find  workmen. 

It  is  said  that  2,500,000  adult  males,  about  one-fifth  of 
the  wage-earning  population  of  Great  Britain,  will  at  the  outset 
be  comprised  in  this  insurance  plan.  Their  contribution  is  ex- 
pected to  be  about  six  pence  (12  cents)  per  week  each,  an 
equal  sum  to  be  contributed  by  the  employers.  The  amount  to 
be  contributed  by  the  government  has  not  been  fixed  but  it  will  be 
charged  with  the  expenses  of  administration,  including  those  of  the 
employment  agencies,  and  will  guarantee  payment.  This  means 
that  appropriations  will  probably  be  made  to  cover  any  deficit, 
although  it  is  obvious  that,  should  contributions  prove  to  be 
much  too  small,  they  would  probably  also  be  increased  by  amend- 

376 


INSURANCE  AGAINST  UNEMPLOYMENT 

ing  the  law.  This  is  the  most  ambitious  scheme  for  unemployment 
insurance  that  has  ever  been  proposed,  but,  being  a  government 
measure,  it  is  not  unlikely  to  be  adopted  by  the  British  Parliament. 
It  entirely  prevents  funds  raised  for  protection  against  involuntary 
unemployment  from  being  drawn  upon  for  other  purposes.  This 
should  strengthen  labor  unions  by  enabling  them  to  raise  funds 
for  the  support  of  their  members  while  on  strike  or  during  lock- 
outs, independently  and  without  reference  to  ordinary  unemploy- 
ment. Undoubtedly  the  unions  have  suffered  severely  during 
times  of  financial  depression,  both  because  of  the  ready  disposi- 
tion of  workingmen  to  underbid  one  another  at  such  a  time  and 
to  leave  the  unions  in  order  to  do  so,  and  because  the  expected 
support  from  the  unions  was  not  forthcoming  or  was  placed 
upon  a  charity  basis. 

It  is  believed  by  competent  observers  that  the  success  of 
a  plan  of  compulsory  insurance  against  unemployment  will  depend 
chiefly  upon  two  things:  first,  whether  or  not  during  times 
of  prosperity  contributions  will  keep  up  and  large  accumula- 
tions of  funds  be  thus  secured,  in  order  that  the  heavy  pressure 
during  times  of  depression  may  be  met;  and  second,  whether  or  not 
boards  charged  with  the  administration  of  the  law  will  encourage 
special  studies  and  investigations  to  be  made  of  the  causes  of 
unemployment  with  a  view  to  prevention.  If  these  things  are 
neglected,  it  is  generally  expected  that  the  scheme  will  in  the  end 
be  disastrous,  involving  enormous  pressure  upon  the  central 
government  for  large  funds  at  a  time  when  business  depression 
is  greatest,  and  contributing  little  or  nothing  to  the  determina- 
tion of  causes  and  their  removal. 


377 


XVI 

INSURANCE  AGAINST   UNEMPLOYMENT  IN  VARIOUS 

COUNTRIES 

GREAT  BRITAIN 

A  has  been  stated  in  the  previous  chapters,  the  radical  and 
comprehensive  scheme  in  England  for  dealing  with  insur- 
ance for  unemployment  is  only  a  proposed  program  as  yet. 
Virtually  none  exists  except  in  trade  unions.  In  these  the  funds 
are  often  used  for  strikes  and  lockouts  as  well  as  for  involuntary 
unemployment.  The  lack  of  government  provision  up  to  this  date 
is  surprising,  as  England  is  primarily  an  industrial  country  which 
for  centuries  has  presented  a  most  distressing  unemployment 
problem.  Poor  relief  has  always  been  the  great  reliance  of  a  con- 
siderable portion  of  the  population.  Today,  with  a  largely  in- 
creased population,  conditions  are  appalling.  This  may  be  illus- 
trated by  the  situation  in  a  typical  trade.  In  the  decade  from 
1 88 1  to  1891,  35,000  men  were  engaged  in  the  building  trades. 
In  the  next  ten  years,  the  number  rose  to  327,000  and  today  it  is 
1,300,000.  Work  has  not  increased  proportionately  and  a  large 
number  of  able-bodied  men  are  chronically  unemployed. 

According  to  the  careful  investigation  of  the  well-known 
statistician  and  economist,  A.  L.  Bowley,  the  number  of  unem- 
ployed varies  between  150,000  and  300,000.  To  properly  sup- 
port this  army,  at  least  ^6,000,000  ($29,222,000)  per  annum 
would  be  necessary,  and  in  bad  years  the  amount  would  rise  to 
;£i  0,000,000  ($48,700,000).  The  old  method  of  poor  relief  offers 
no  solution  for  such  a  problem.  In  spite  of  the  example  of  the 
municipalities  of  Ghent,  Amsterdam,  Cologne  and  continental 
countries  with  their  more  or  less  successful  schemes  for  insurance 
against  unemployment,  the  English  method  has  been  almost  en- 
tirely limited  to  poor  relief  and  to  what  is  known  as  "distress 

378 


GREAT   BRITAIN    AND     NORWAY 

works,"  that  is,  public  work  undertaken  for  the  purpose  of 
furnishing  employment. 

As  long  ago  as  1892,  the  Local  Government  Board  drew  the 
attention  of  municipalities  to  this  method  of  solving  the  problem. 
As  a  result,  96  communities  undertook  such  public  work  and  thou- 
sands of  persons  were  thus  employed.  The  city  of  Glasgow  was 
foremost  in  establishing  such  labor,  and  in  the  winter  of  1895 
over  3500  workmen  were  employed  chiefly  in  the  stone  works. 
The  men  were  given  three  meals  a  day  and  a  shilling  in  cash,  enough 
to  keep  them  alive  until  industrial  conditions  improved.  In  the 
winter  of  1905,  "distress  works"  were  carried  on  in  nearly  all  the 
districts  of  London,  as  well  as  in  74  provincial  towns,  41,000  men 
finding  employment.  The  pay  in  most  cases  was  from  five  pence 
to  seven  pence  (10  to  14  cents)  an  hour,  and  the  daily  work- time 
was  from  eight  to  eight  and  one-half  hours. 

With  this  method  in  operation  throughout  the  country, 
Parliament  in  1905  passed  what  is  now  known  as  "The  Unem- 
ployed Workmen  Act."  By  this  statute  power  was  given  the 
Local  Government  Board  to  establish  "distress  commissions"  in 
the  larger  cities  and  towns;  to  work  in  co-operation  with  local 
authorities  in  order  to  find  direct  employment;  and  to  arrange  for 
such  "distress  works"  as  the  larger  central  commissions  found 
necessary  and  feasible.  To  defray  expenses,  the  Board  was  given 
the  power  to  contribute  one  penny  for  each  pound  the  community 
contributed.  This  law  holds  good  for  29  municipalities  in  England 
of  50,000  population  or  over,  but  can  be  applied  to  towns  of 
10,000  if  the  consent  of  the  local  authorities  is  obtained.  It  is 
now  operative  in  75  municipalities  and  14  towns. 

The  present  bill  was  introduced  by  the  government,  May  20, 
1909,  and  is  made  applicable  at  once  to  building,  construction, 
engineering,  machine  and  ship-building  trades,  the  benefits  pro- 
posed being  somewhat  smaller  than  trade  unions  now  allow  their 
members.* 

NORWAY 

The  subject  of  insurance  against  unemployment  in  Norway 
has  already  been  dealt  with  in  the  foregoing  chapter  (page  374). 

*  For  further  discussion  see  page  375. 

379 


INSURANCE   AGAINST   UNEMPLOYMENT 

The  country  is  trying  an  interesting  social  and  political  experi- 
ment. A  law  authorizing  trade  unions  to  organize  unemploy- 
ment insurance  funds  was  passed  in  1906.  This  law  gives  to 
trade  unions  complying  with  its  provisions  the  right  to  receive 
from  the  state  one-fourth  of  the  benefits  granted  to  the  insured. 
One  of  the  conditions  of  receiving  this  state  subvention  is,  however, 
that  the  unions  must  accept  non-union  workmen  of  the  trade  for 
membership  in  the  fund.  The  latter  have  no  right  to  vote  and  the 
unions  may  ask  an  additional  premium  from  them  to  meet  the 
expense  of  the  management  of  the  fund.  Unemployment  due  to 
strike  or  lockout  does  not  entitle  one  to  indemnity.  The  law  has 
been  accepted  by  only  a  few  societies,  and,  as  noted,  up  to  the 
present  time  has  been  opposed  by  workingmen.  They  argue  that 
to  accept  non-union  men  would  lessen  the  incentive  to  become  and 
remain  members  of  the  union. 

SWEDEN 

There  is,  as  yet,  no  effort  of  any  consequence  toward  estab- 
lishing unemployment  insurance  funds  in  Sweden. 

DENMARK 

An  important  step  forward  in  the  protection  of  workingmen 
in  Denmark  was  taken  in  1903,  when  a  commission  was  appointed 
to  report  on  the  feasibility  of  establishing  invalidity  and  unem- 
ployment insurance.  This  commission  included  the  former  chief 
inspector  of  friendly  societies,  who  was  thoroughly  acquainted  with 
workingmen's  associations  and  possessed  their  confidence  to  a 
marked  degree.  Under  his  leadership,  a  law  was  enacted  providing 
for  a  large  subvention  to  well  organized  trade  unions  which  would 
voluntarily  undertake  the  establishment  of  unemployment  funds, 
under  the  further  condition  that  they  admit  to  the  latter  benefits 
non-union  workmen  of  the  trade.* 

The  law,  passed  April  9,  1907,  went  into  effect  on  August  i 
of  the  same  year  and  was  favorably  received  by  the  trade  unions. 
Under  its  provisions,  unemployment  societies  may  become  "recog- 
nized" and  thus  eligible  for  a  share  in  the  state  subsidy  if  they  have 
at  least  50  members  and  comply  with  other  requirements  of  the  law. 

*  For  further  discussion  see  page  373 
380 


DENMARK 

Membership  is  confined  to  working  people  between  the  ages  of 
eighteen  and  sixty.  Non-union  workmen  admitted  to  the  unions 
for  benefits  in  the  unemployment  fund  make  the  same  contribution 
to  it  as  members,  plus  a  small  fee  for  expenses  of  administration, 
this  latter  item  being  covered  for  members  by  their  dues.  After  a 
year  of  operation,  there  were  in  1908,  40  unemployment  insurance 
societies, — 39  trade  and  one  local  society, — with  76,000  members, 
nearly  half  of  whom  live  in  the  city  of  Copenhagen.  The  trade 
societies  always  contain  both  good  and  bad  risks,  while  local 
societies  usually  escape  the  bad  ones.  The  largest  society  (Ar- 
bejdmandenes  Forband)  is  composed  of  unskilled  laborers,  and  out 
of  its  28,000  members,  21,000  carry  unemployment  insurance. 

Benefits  granted  by  the  funds  may  take  the  form  of  traveling 
expenses,  rent,  or  daily  allowances  of  money  or  food.  The  benefits 
must  not  exceed  on  the  average  two-thirds  of  the  current  daily 
earnings  in  the  trade  and  in  that  locality.  The  minimum  benefit 
per  day  is  50  ore  (13  cents)  and  the  maximum  two  crowns 
(54  cents),  one  crown  being  the  usual  allowance.  These  benefits 
may  be  paid  for  at  least  70  days  in  any  one  year.  In  most 
trades,  members  are  entitled  to  benefits  after  the  sixth  or  seventh 
day;  but  in  some  trades  in  which  unemployment  is  usual  at  certain 
seasons  they  are  indemnified  after  longer  periods  only.  Each 
society  endeavors  to  find  employment  for  its  members,  who  are 
required  to  accept  it  when  offered;  but  as  yet  no  system  of  agencies 
has  been  developed. 

The  state  contributes  one-half  the  cost,  reimbursing  to  that 
amount  at  the  end  of  the  year,  the  society  which  must  make  the 
current  payments  out  of  its  funds.  Communes  may  contribute 
also,  but  usually  do  not  do  so.  A  society  may  grant  as  large  bene- 
fits as  it  pleases,  but  the  state  is  liable  for  only  20  ore  (5^  cents) 
per  diem  and  for  not  more  than  250,000  crowns  ($67,500)  in  any 
one  year.  The  first  year  the  law  was  in  operation  500,000  crowns 
($135,000)  were  actually  required  and  no  objection  was  made  to 
appropriating  this  amount.  The  government  is  well  satisfied  that 
the  plan  is  a  success  at  a  time  when  relief  of  the  unemployed  is 
everywhere  such  a  serious  question. 

These  funds  cannot  be  drawn  upon  for  the  support  of  men  out 
of  employment  because  of  a  strike,  lockout  or  other  labor  disturb- 

381 


INSURANCE    AGAINST   UNEMPLOYMENT 

ance.  A  member  may  be  transferred  from  one  society  in  his  trade 
to  another  in  a  different  section  without  losing  any  of  his  rights. 
Yearly  dues  per  member  were  finally  fixed  at  4  to  10  crowns 
($1.08  to  $2.70)  in  12  societies;  10  to  15  crowns  ($2.70  to  $4.05)  in 
14  societies;  from  15  to  20  crowns  (14.05  to  $5.40)  in  4  societies, 
and  20  crowns  ($5.40)  or  over  in  4  societies.  Weekly  premiums 
commonly  collected  from  members  were  15  ore  (4  cents),  20  ore 
(5^  cents),  and  25  ore  (6f  cents),  almost  half  of  the  societies  using 
one  of  these  three  rates. 

The  following  figures  for  the  first  eight  months  of  the  oper- 
ation of  the  law  show  the  financial  conditions  prevailing  in  34 
unemployment  societies. 

TABLE     141. — RECEIPTS    AND    DISBURSEMENTS    OF     DANISH     UNEM- 
PLOYMENT  FUNDS    FOR  EIGHT    MONTHS   ENDING 
MARCH    31,    1908 

Receipts  (excluding  state  subsidy) 

Crowns 
Dues  from  regular  members  288,161 


Dues  from  special  members 
Gifts  from  trade  unions  . 
Interest  on  capital  . 
Other  income,  fines,  etc. 


11,992 

19,180 

1,556 

7.452 


Total  income         ....       328,341 

Disbursements 

Crowns 
Daily  allowance  in  cash  206,020 


Traveling  benefits 
Christmas  benefits    . 
Moving  and  house  rents 
Administration 


4.548 
3-454 
1,772 
30,509 


Total  expenditures      .       .'      .        246,303 

HOLLAND 

At  the  present  time,  there  is  no  general  state  provision  for 
unemployment  insurance  in  Holland,  although  there  has  been 
considerable  activity  in  this  connection.  In  December,  1896,  a 
commission  was  appointed  by  the  city  of  Amsterdam  to  investigate 
the  subject.  It  was  short-lived  but  its  labors  led  to  a  second  com- 
mission, which  recommended  the  Belgian  method  as  pursued  in 
Ghent,  of  state  subventions  to  trade  unions  introducing  unem- 
ployment benefits.  Following  the  commission's  suggestions,  most 

382 


HOLLAND 

of  the  larger  cities  are  experimenting  with  unemployment  insur- 
ance. In  Amsterdam,  Utrecht,  Arnheim,  Hiversum,  as  well  as 
more  recently  in  the  Hague,  funds  have  been  voted  on  the  Ghent 
plan,  as  subventions  to  trade  unions. 

The  most  interesting  and  successful  of  these  ventures  is  in 
Amsterdam,*  where,  in  1907,  eleven  trade  unions  worked  in  co- 
operation with  the  authorities.  The  scheme  was  inaugurated 
January  i,  1907,  and  December  31  of  the  same  year  3196  members 
were  insured,  each  member  paying  a  weekly  premium  ranging  from 
three  or  four  cents  for  printers  to  as  much  as  10  or  20  cents 
for  those  employed  in  the  building  trades,  the  amount  depending 
upon  local  conditions  within  the  various  trades.  Benefits  were 
paid  after  six  days'  unemployment  and  amounted  to  a  consider- 
able part  of  the  member's  average  wage,  being  from  three  to 
seven  and  one-half  guilders  ($1.20  to  $3.00)  per  week  for  maximum 
periods  varying  from  five  to  eight  weeks.  In  order  to  receive 
them  a  member  must  have  paid  premiums  for  at  least  six 
months.  The  municipal  subsidy  amounted  to  6000  guilders 
($2400)  for  the  year  1907,  a  sum  about  equal  to  the  premiums  paid. 
Labor  unions  must  adopt  rules,  satisfactory  to  the  Central  Council, 
but  otherwise  the  management  is  left  entirely  to  the  unions. 
These  unions,  unlike  those  in  Denmark  and  Norway,  are  not 
obliged  to  insure  workingmen  who  are  not  members. 

In  the  other  cities  named,  except  in  the  Hague,  much  the 
same  conditions  prevail,  the  subvention  in  each  case  being  about 
equal  to  the  premiums  paid  by  the  members.  In  the  Hague,  the 
ordinance  required  the  admission  of  non-union  workingmen  to  the 
benefits  of  the  fund.  Few  unions  have  acceded  to  this,  and  the 
plan  has  failed  in  that  city. 

It  is  the  opinion  of  a  competent  student  of  this  subject  in 
Holland  that  an  unemployment  insurance  system  in  that  country 
could  not  cope  with  a  labor  crisis  but  that  it   might   have  ad- 
vantages in  providing  against  unemployment  in  seasonal  trades. 
At  the  present  time  a  compulsory  unemployment  insurance  law 
would  hardly  appear  to  be  feasible,  but  a  measure  is  now  before 
the  Staten  Generaal  for  the  establishment  of  a  state  system,  ex- 
tending the  existing  plan  throughout  the  country. 
*  For  further  discussion  see  page  372. 
383 


INSURANCE    AGAINST   UNEMPLOYMENT 
BELGIUM 

Plans  for  unemployment  insurance  have  been  extensively 
developed  in  Belgium.  As  early  as  1888,  Liege  made  an  effort  to 
meet  the  problem  for  its  least  efficient  workmen  but  the  attempt 
was  early  discontinued.  The  system  established  in  Ghent  in  1901 
is  the  most  important  example  of  unemployment  insurance  in 
Belgium  and  has  become  a  model  for  efforts  elsewhere,  espe- 
cially in  France  and  Holland.  In  Ghent,  a  public  subvention 
is  made  to  such  trade  unions  as  will  provide  insurance  against 
unemployment,  but  they  must  use  the  fund  for  such  relief  only. 
The  amount  of  subvention  is  adjusted,  first,  according  to  payments 
made  by  the  trade  union,  and  second,  by  the  condition  of  the 
unemployment  fund.  Maximum  benefits  of  six  francs  ($1.20)  per 
week  are  paid  for  not  more  than  60  days  in  one  year,  the  contribu- 
tion of  the  city  not  to  exceed  the  sum  granted  by  the  society  out  of 
its  own  funds.  In  1901,  the  amount  paid  by  the  town  council  of 
Ghent  reached  10,000  francs  (f 2,000)  a  sum  since  raised  to 
20,000  francs  ($4,000)  per  annum.  The  practical  effect  of 
the  plan  has  been  that  trade  societies  have  extensively  developed 
unemployment  insurance  funds,  about  thirty  unions  of  the  most 
diverse  types  having  taken  advantage  of  it.* 

The  subvention  granted  by  the  state  is  also  open  to  working- 
men  not  connected  with  trade  unions,  who  must,  however,  become 
members  of  a  communal  society.  They  need  only  procure  a  sav- 
ings book  and  by  a  single  payment  of  50  centimes  (10  cents) 
become  members,  and  in  case  of  unemployment,  draw  from  the 
municipal  fund  on  the  same  conditions  as  members  of  unions. 
This  part  of  the  system  has  not  been  very  successful. 

FRANCE 

The  development  of  the  Ghent  system  of  unemployment 

insurance  early  aroused  much  interest  in  France.    Accordingly, 

the  Minister  of  Commerce,  M.  Millerand,  authorized  the  Superior 

Council  of  Labor  in  1903  to  investigate  the  subject,  and  to  study 

the  applicability  of  the  method  to  conditions  in  France.    The 

commission  approved  the  system  and  presented  a  comprehensive 

program.     On  November  30,   1904,  the  Chamber  voted  110,000 

*  For  further  discussion  see  page  373. 

384 


FRANCE    AND    SWITZERLAND 

francs  ($22,000)  to  subsidize  insurance  of  this  kind.  The  sum 
was  to  be  divided  among  mutual  societies  of  workingmen  grant- 
ing unemployment  benefits. 

The  decree  of  September  9,  1905,  later  somewhat  modified, 
arranged  for  putting  these  organizations  on  a  better  basis.  The 
plan  adopted  differs  from  the  Ghent  system,  in  that  the  gov- 
ernment funds  are  given  directly  to  the  societies,  which  retain 
their  autonomy.  They  must,  however,  comply  with  certain  defi- 
nite conditions,  as  for  instance,  that  of  having  at  least  100  mem- 
bers of  the  same  trade,  and  of  maintaining  free  employment 
agencies.  Societies  grant  such  benefits  as  they  see  fit.  The  state  on 
the  other  hand,  plans  its  subventions  on  the  assumption  that  each 
unemployed  person  will  receive  two  francs  (40  cents)  a  day  as  a 
maximum  benefit  for  a  maximum  period  of  60  days  in  any  one  year. 
The  societies  are  not  all  treated  alike;  federal  organizations  whose 
activities  spread  over  a  large  area  are  favored  by  the  government 
and  receive  aid  to  the  extent  of  24  per  cent  of  the  benefits  paid  by 
them.  Local  societies,  on  the  other  hand,  are  left  in  a  large  meas- 
ure to  the  communes,  receiving  from  the  state  only  16  per  cent  of 
the  sums  they  expend. 

These  societies,  in  most  cases,  are  composed  of  from  100  to  500 
members.  In  1905, 47  organizations  received  subventions,  in  1906* 
64,  and  in  1907,  68.  The  number  of  days  of  unemployment  for 
which  benefits  were  paid  amounted  to  280,378  in  the  three  years, 
and  more  than  one  member  in  five  drew  benefits.  Of  special  im- 
portance were  the  federal  associations  of  book-printers,  mecha- 
nicians and  lithographers  which  had,  in  1907,  16,810  members. 
During  the  three  years,  they  received  7 1 ,000  francs  (f  14,200)  in  sub- 
ventions and  paid  313,000  francs  ($62,600)  in  benefits  from  their 
own  funds.  Small  as  this  beginning  is,  it  is  founded  on  the  encour- 
aging principle  of  self-help  and  is  confidently  expected  to  aid 
materially  in  the  solution  of  the  problem  of  unemployment. 

SWITZERLAND 

There  is  as  yet  no  federal  provision  for  unemployment  in- 
surance in  Switzerland.     Much  attention,  however,  has  been  di- 
rected to  the  subject,  and  what  promises  to  be  a  satisfactory 
measure  has  been  proposed  and  passed  by  the  Council.    This 
25  F  385 


INSURANCE    AGAINST   UNEMPLOYMENT 

provides  for  federal  subsidization  of  all  public  cantonal  agencies  and 
of  mutual  associations  for  finding  employment  for  workingmen. 
Subsidies  covering  management  expenses  are  to  be  given,  pro- 
vided these  agencies  are  general  in  character,  cover  all  industries, 
and  make  provision  for  women  as  well  as  for  men.  They  are  ex- 
pected to  serve  as  a  judicial  body  in  the  settlement  of  labor  disputes. 
It  will  be  some  time,  however,  before  this  measure  becomes  a  law. 

The  earliest  effort  to  establish  unemployment  insurance  in 
Switzerland  was  inaugurated  in  Berne  in  1893,  and  the  scheme 
then  established,  with  some  modifications,  is  still  in  existence  and 
serves  as  an  important  example  of  its  kind.  It  is  carried  on  in 
close  connection  with  the  municipal  labor  registry,  is  under  the 
control  of  a  sub-committee  of  the  latter,  and  is  voluntary  in 
character,  except  that  municipal  employes  are  required  to  insure 
in  this  fund.  Its  financial  condition  is  not  very  sound,  for  out  of 
508  persons  insured  in  1907-1908,  233  or  46.7  per  cent  reported 
themselves  as  unemployed.  The  municipality  makes  good  any 
deficits  incurred. 

Numerous  other  experiments  in  unemployment  insurance 
have  been  made  in  the  various  cantons  of  Switzerland,  the  most 
interesting  of  these  having  been  that  undertaken  in  St.  Gall. 
This  was  obligatory  upon  all  workingmen  whose  average  earnings 
did  not  exceed  five  francs  ($ i.oo)  and  who  were  not  insured  else- 
where. The  fund  was  created  under  a  law  passed  by  the  Council  of 
the  canton  in  May,  1894,  which  empowered  communal  or  municipal 
authorities  to  inaugurate  -compulsory  unemployment  insurance 
funds.  The  canton  fund  was  conducted  in  connection  with  public 
employment  bureaus,  but  after  two  years  of  varying  success  was 
discontinued.  The  failure  was  due  to  several  causes:  the  difficulty 
of  getting  men  to  pay  their  dues;  the  fact  that  the  unemployment 
fund  was  administered  by  the  poor  law  department  and  therefore 
unpopular;  but  chiefly  to  the  fact  that  the  majority  of  those  using 
the  fund  were  the  poorer  workmen  who  contributed  losses  far 
beyond  a  fair  average.  Skilled  workmen  were  largely  insured 
against  unemployment  by  their  trade  unions.  No  contributions 
were  collected  from  employers. 

In  1901,  the  Basel  Labor  Federation  of  trade  unions  estab- 
lished an  unemployment  fund,  in  which  membership  was  open  to 

386 


ITALY 

all  workingmen  living  and  employed  in  Basel,  whether  trade 
unionists  or  not.  The  funds  were  raised  by  (i)  monthly  contribu- 
tions from  members;  (2)  annual  subscriptions  from  honorary 
members;  (3)  donations  and  voluntary  contributions;  (4)  grants 
from  trade  unions;  and  (5)  grants  from  the  canton.  The 
amount  of  pay  during  unemployment  was  determined  by  the 
committee  in  charge  of  the  fund  jointly  with  the  unemployment 
committee.  One  became  a  full  member  only  after  he  had  paid 
contributions  for  six  months  and  could  not  claim  benefits  until 
fifteen  days  after  he  had  reported  himself  unemployed.  This 
bureau  was  discontinued  in  1907,  and  the  plan  has  been  entirely 
abandoned. 

ITALY 

No  state  provision  for  unemployment  insurance  exists  as  yet 
in  Italy.  A  few  trade  unions,  those  of  printers,  lithographers  and 
hat  makers,  for  example,  give  benefits  to  their  members  during  un- 
employment. More  important,  however,  is  the  work  recently  inau- 
gurated in  Milan  by  the  philanthropic  organization,  founded  by  the 
late  Prosper  Moise  Loria,  known  as  "LaSocieta  Umanitaria." 
This  association,  following  the  Ghent  system,  grants  subventions  to 
certain  mutual  societies,  which  furnish  relief  in  case  of  involuntary 
unemployment.  Only  those  societies,  however,  are  subsidized 
which  in  addition  to  unemployment  insurance,  provide  benefits  for 
their  members  when  in  distress  from  any  cause.  The  contribution 
by  the  Umanitaria  is  50  per  cent  of  the  aggregate  benefits  paid  by 
the  societies,  during  unemployment,  the  sum  not  to  exceed  50  cent- 
isimi  (10  cents)  a  day  for  not  longer  than  60  working  days  in 
any  one  year.  The  Umanitaria  may,  in  the  course  of  the  year, 
decrease  its  contribution  to  accord  with  the  unemployment  bene- 
fits paid  and  the  available  resources  of  the  fund;  no  contribu- 
tion is  given  to  a  society  which  furnishes  relief  in  excess  of  1.50  lire 
(30  cents)  a  day.  The  society  began  its  work  July  i,  1905,  with 
27  societies  and  6449  members.  At  the  end  of  that  year,  the 
societies  had  increased  to  33,  with  a  membership  of  8363 ;  in 
1906,  to  36  societies  with  8913  members;  and  in  1907,  to  46  so- 
cieties and  11,944  members.  The  following  data  give  a  record 
of  the  operations  of  Umanitaria  and  of  these  societies: 

387 


INSURANCE    AGAINST   UNEMPLOYMENT 

TABLE    142. — MEMBERSHIP    AND   BENEFITS   OF    UNEMPLOYMENT 
DEPARTMENT   OF    UMANITARIA,    ITALY,    1906    AND    1907 

'     1906  1907 

Members  drawing  benefits         .       .       .                     588  1477 

Days  for  which  benefits  were  paid    .       .                  12242  36046 

Benefits  paid  by  societies  (Lire)        .       .             15132.75  38805.66 

Additional  benefits  paid  by  Umanitaria  (Lire)       5827.75  17661.92 

Total  benefits  paid  (Lire)   ....             20960.50  56467.58 


GERMANY 

In  spite  of  the  protection  afforded  men  out  of  work,  by  sick- 
vness,  invalidity  and  old  age  insurance,  Germany  is  confronted 
by  a  serious  unemployment  problem.  This,  as  in  other  coun- 
tries, is  in  the  main  due  to  the  shifting  labor  market  and  to  the 
peculiar  conditions  of  certain  industries.  Considerable  atten- 
tion has  been  directed  to  the  solution  of  the  problem  by  labor 
unions,  which  expend  large  sums  annually  for  the  relief  of  their 
members.  There  is,  moreover,  widespread  activity  in  this  connec- 
tion on  the  part  of  labor  bureaus,  which  have  been  established  in 
nearly  every  large  city  under  communal  or  semi-public  auspices. 
Thousands  of  workmen  have  thus  found  employment  every  year, 
without  charge. 

Recently,  however,  several  of  the  large  cities,  following  the 
plan  which  originated  in  Berne,  Switzerland,  have  established 
unemployment  insurance  funds  in  connection  with  the  municipal 
labor  bureaus.  The  most  highly  developed  is  in  Cologne  and  has 
been  in  operation  since  1894.  It  was  founded  by  private  charity 
and  aided  by  municipal  subvention;  but  its  administration,  now 
wholly  in  the  hands  of  the  city,  is  entrusted  to  a  body  of  citizens, 
working  in  co-operation  with  the  labor  organizations.  The 
executive  committee  consists  of  the  mayor,  the  chairman  of  the 
municipal  labor  bureau  and  24  elected  members;  of  the  latter, 
one-half  are  insured  workingmen  and  one-half  honorary  members, 
six  of  whom  are  employers  and  six  neither  employers  nor  em- 
ployes. The  fund  is  available  for  both  skilled  and  unskilled  work- 
men, who  must  be  at  least  eighteen  years  old  and  physically  able 
to  work.  Insurance  is  for  one  year,  beginning  on  April  i,  no  new 
members  being  accepted  after  the  first  Sunday  in  June.  Each 

388 


GERMANY 

insured  workingman  pays  contributions  for  at  least  34  weeks,  the 
unskilled  at  the  rate  of  35  pfennige  (9  cents)  and  the  skilled  at  45 
pfennige  (n  cents)  a  week.  Relief  is  granted  only  during  the 
winter  months,  from  December  to  March  when  unemployment  is 
most  probable  and  most  distressing  in  its  consequences.  The  insured 
are  expected  to  make  their  small  weekly  payments  in  the  period 
when  they  are  likely  to  have  work.  Benefits  are  two  marks 
(50  cents)  per  day,  payable  to  members  in  good  standing  and 
beginning  with  the  third  day  of  unemployment.  These  continue 
for  30  days,  after  which  period  only  one  mark  (25  cents)  per 
day  is  paid,  and  those  who  receive  as  much  as  three-fourths  of 
the  maximum  benefits  in  the  course  of  one  year,  are  limited  in  the 
following  year  to  two  marks  per  day  for  the  first  20  days  of  unem- 
ployment, and  to  one  mark  for  only  14  days  additional.  No  bene- 
fits are  paid  for  Sundays  and  holidays  nor  for  unemployment 
resulting  from  sickness,  invalidity,  strike  or  fault  of  the  working- 
man.  The  fund,  through  its  connection  with  the  labor  bureau, 
endeavors  to  find  work  for  as  many  of  its  unemployed  as  possible, 
who  must  present  themselves  twice  a  day  at  the  registry  and 
accept  what  is  offered. 

In  the  year  ending  March  31,  1908,  1,505  men  were  insured, 
of  whom  399  were  unskilled.  The  majority  were  between 
thirty  and  forty  years  of  age  and  most  of  the  trades  were 
represented.  Of  the  above,  i  ,382  remained  insured  up  to  the 
time  when  benefits  could  be  claimed,  and  of  these  1,127,  or  81.5 
per  cent,  were  unemployed  at  some  period  during  the  winter' 
Employment  was  found  for  a  total  of  891  persons,  or  about  80 
per  cent,  for  an  aggregate  period  of  20,042  days.  Benefits  were 
paid  for  29,899  days,  of  which  18,770^  were  at  the  rate  of  two 
marks  and  11,128^  at  one  mark  a  day.  The  total  cash  benefits 
were  48,669.5  marks  ($12,167.38).  The  portion  of  the  benefits 
provided  by  the  workingmen  themselves  amounted  to  20,662 
marks  ($5,165.50)  or  42.5  per  cent  of  the  total  amount.  The  re- 
mainder was  paid  from  voluntary  contributions  of  honorary 
members  and  patrons  and  from  the  interest  on  the  funds  which 
on  March  31,  1908,  amounted  to  136,259  marks  ($34,065.75).* 

*  For  further  discussion  see  page  371. 
389 


INSURANCE   AGAINST   UNEMPLOYMENT 


The  following  table  shows  the  operations  since  1896. 

TABLE  143. — STATISTICS  OF  THE  UNEMPLOYMENT  FUND  IN  COLOGNE, 

1896-1908 


Num- 

L--, 

Unemployed 
entitled  to 

Number 
of  days 

Per 

cent  of 

Year 

her 
apply- 
ing for 
insur- 

benefits 

for  which 
work  was 
obtained 
by 

Number  of 
days,  bene- 
fit paid 

Total 
benefits 

Contribu- 
tions of 
insured 

contri- 
butions 
of  in- 
sured 

Num- 

Per 

ance 

ber 

Cent 

agency 

to  total 

(Marks) 

(Marks) 

benefits 

1896-97 

220 

96 

72.7 

2181 

1408 

2355 

IOOO 

42.5 

1897-98 

324 

'5' 

64.0 

2646 

2197 

3485 

2213 

63.5 

1898-99 

347 

144 

51.1 

28574 

20354 

3343 

2444 

73-' 

1899-00 

256 

•54 

68.1 

37084 

27724 

4708 

2009 

42.7 

1900-01 

57' 

44' 

82.3 

64784 

126584 

'9337 

4561 

23.6 

1901-02 

1205 

842 

76.2 

'5853 

182584 

30046 

12434 

41.4 

1902-03 

'355 

1008 

79-7 

289464 

160454 

28807 

.4388 

49-7 

i  903-04 

1624 

1  164 

77-5 

267154 

22910 

399'5 

19772 

49-5 

1904-05 

1717 

1271 

79.6 

296484 

25034 

42832 

20782 

48.5 

1905-06 

1610 

1087 

74-3 

287144 

13414 

23645 

21681 

91.7 

1906-07 

1255 

980 

84.8 

18238 

24086 

40014 

17194 

43.0 

1907-08 

1505 

1  127 

8l.5 

20042 

29899 

18669 

20662 

42.5 

Leipsic  has  also  established  an  insurance  fund,  in  connec- 
tion with  its  labor  bureau.  An  interesting  feature  of  this  fund  is 
that  membership  is  open,  not  only  to  individuals,  but  to  groups  of 
workers.  The  former  are  divided  into  four  classes,  according  to 
risk  of  unemployment,  the  weekly  premiums  being  30,  40,  50  and 
60  pfennige  (7^,  10,  12^  and  15  cents)  respectively  for  each  class. 
Benefits  are  1.20  marks  (30  cents)  per  week  day.  In  group  insur- 
ance, the  premium  is  reduced  to  10  pfennige  (2%  cents)  a  week  per 
member,  the  benefits  being  only  75  pfennige  (19  cents)  per  week 
day.  In  either  case,  the  age  limit  is  between  the  age  of  seven- 
teen and  sixty  and  insurance  must  be  in  force  for  at  least  42 
weeks  before  benefits  may  be  claimed.  Unlike  Cologne,  in  the 
Leipsic  fund  relief  is  not  limited  to  any  period  of  the  year.  The 
institution  is  still  in  its  infancy  and  it  is  impossible  to  say  if  it 
will  be  successful.  A  similar  institution  has  been  established  in 
Munich  and  more  recently  one  in  Strasburg.  Reports  from  these 
and  other  quarters  give  the  impression  that  employment  insur- 
ance is  practicable  and  that  before  long  it  will  be  undertaken 

390 


AUSTRIA 

more  generally  throughout  the  empire.  Much  of  the  pressure 
upon  the  sickness  insurance  societies  in  times  of  general  unem- 
ployment would  thereby  be  relieved. 

Leaders  of  the  Social  Democracy,  who  are  extremely  active 
in  the  campaign  for  the  establishment  of  unemployment  insur- 
ance funds,  urge  that  this  work  should  be  done  by  the  state 
and  communes,  through  labor  unions,  and  that  as  in  other  forms 
of  insurance,  prevention  should  be  the  watchword.  The  state 
and  communes,  moreover,  are  urged  to  provide  for  public  works 
during  seasons  of  the  year  when  other  labor  is  not  to  be  had. 

AUSTRIA 

No  effort  of  any  note  has  as  yet  been  made  to  establish 
unemployment  insurance  in  Austria. 


391 


COMPLETE  INSURANCE  SYSTEMS 


XVII 

TENDENCY  TOWARD   A  COMPLETE  AND  CONNECTED 
SYSTEM  OF   INSURANCE  FOR  WORKINGMEN 

IN  all  countries  of  Europe,  the  beginnings  are  readily  dis- 
cernible of  a  movement  toward  a  complete  and  connected 
system  under  which  workingmen  will  be  insured  against  all 
contingencies  where  support  from  wages  is  lost  or  interrupted  by 
any  cause  other  than  voluntary  cessation  of  labor.  In  Germany, 
as  has  been  shown,  much  the  greatest  progress  has  been  made 
toward  the  realization  of  this  ideal.  This  was,  perhaps,  to  be  ex- 
pected, in  view  of  the  fact  that  legislation  of  this  type  was  first 
enacted  there.  It  is  quite  as  much  due,  however,  to  two  other 
circumstances:  the  characteristic  thoroughness  of  the  German 
people,  and  the  manner  in  which  the  original  conception  of  Bis- 
marck has  been  wrought  out  by  the  German  authorities. 

In  civilized  countries,  workingmen  and  their  families  are 
not  permitted  to  starve  when  the  support  of  the  wage-earner 
is  withdrawn.  The  state  and  society  now  make  provision  for 
their  support  in  various  ways.  If  this  provision  is  made  so  as  to 
distribute  the  burden  more  equitably,  to  place  the  responsibility 
for  conditions  where  it  belongs,  to  encourage  prevention  by  giving 
a  strong  financial  incentive,  and  to  preserve  instead  of  to  destroy 
self-respect  and  moral  worth,  no  economic  waste  will  follow, 
since  the  cost  will  be  as  before;  and  there  will  be  much  valuable 
economic  salvage  and  also  enormous  social  advantage. 

Where  a  portion  only  of  the  entire  insurance  system  is  in- 
troduced at  a  given  time,  other  conditions  remaining  as  before, 
it  is  inevitably  found  that  the  scheme  does  not  wholly  fit  in  with 
existing  agencies.  A  good  instance  of  this  is  the  manner  in 
which  the  Workmen's  Compensation  Act,  conceived  and  carried 

395 


TENDENCY  TOWARD  A   COMPLETE   SYSTEM 

out  on  lines  of  individual  responsibility  of  employers,  has  inter- 
fered with  the  growth  and  financial  prosperity  of  the  friendly 
societies  of  Great  Britain.  On  a  purely  voluntary  basis  these 
societies  had  reached  great  proportions  and  were  supplying  sev- 
eral millions  of  families  with  the  means  of  support  during  the 
disablement  of  the  wage-earner,  whether  caused  by  accident  or 
disease.  Duplication  of  protection  referred  to,  it  will  be  remem- 
bered, has  discouraged  workingmen  from  joining,  because  they  claim 
they  will  not  become  sick  except  through  accident  or  occupa- 
tional disease.  Moreover,  it  has  increased  simulation,  because  dis- 
abled workingmen  receive  compensation  from  their  societies  and 
also  through  the  Workmen's  Compensation  Act. 

Another  instance  of  such  interference  is  offered  by  the  Old 
Age  Pension  Act  of  Great  Britain.  Annuities  payable  in  old  age 
or  in  event  of  disability  by  old  age  are  given  both  by  the  state 
and  by  the  friendly  societies.  It  is  expected,  therefore,  that  this 
act  will  have  a  discouraging  influence  upon  applications  for  mem- 
bership in  these  useful  societies,  and  again  that  there  will  be 
doubling  of  benefits.  The  effect  will  not  be  so  pronounced  in  this 
instance,  since  the  provision  limiting  old  age  benefits  to  persons 
not  in  receipt  of  an  income  from  other  sources  exceeding  a  cer- 
tain amount,  will  prevent  duplication  to  some  extent. 

The  proposed  provision  for  compulsory  insurance  against 
unemployment,  which  is  now  under  consideration  in  Great  Bri- 
tain, will  also  interfere  with  the  operation  of  existing  agencies; 
for  such  insurance  is  now  furnished  their  members  by  most  of 
the  trade  unions  and  by  some  of  the  friendly  societies. 

Under  all  laws,  except  under  those  which  provide  for  compul- 
sory insurance,  there  is  in  a  greater  or  less  degree  failure  to  attain 
the  full  purpose  of  legislation.  Complaints  are  made  that  em- 
ployers sometimes  fail,  and  so  deprive  insured  workmen  and 
their  families  of  receiving  the  benefits  provided  by  the  Work- 
men's Compensation  Act;  that  settlements  by  insurance  com- 
panies are  unfair;  that  discrimination  has  arisen  against  certain 
individual  workmen  and  even  against  whole  classes,  particularly 
those  above  a  certain  age.  The  first  defect  has  been  remedied 
in  part  in  France,  through  the  introduction  of  supplementary 
compulsory  insurance,  by  means  of  which  benefits  are  paid 

396 


TENDENCY   TOWARD    A    COMPLETE    SYSTEM 

when  employers,  or  the  companies  in  which  workingmen  are 
insured,  do  not  meet  their  obligations;  and  in  Denmark,  the 
state  monopolizes  the  adjustment  of  claims  and  requires  em- 
ployers and  insurance  companies  to  accept  its  determination 
both  of  the  fact  of  liability  and  of  the  amount.  Even  these,  how- 
ever, are  only  partial  remedies  and  of  restricted  application. 

Economic  waste  also  occurs  in  the  operation  of  voluntary 
systems,  owing  to  the  fact  that  soliciting  agents  must  be  em- 
ployed. This  might  be  reduced,  but  certainly  not  wholly  elimi- 
nated, if  there  were  compulsion  but  a  choice  of  companies. 

Another  feature  due  to  the  lack  of  completeness  and  co- 
ordination of  insurance  systems  is  simulation  and  malingering. 
These  evils  are  as  great  under  a  compulsory  as  under  a  voluntary 
scheme  and  are  largely  the  result  of  "out-of-work"  conditions, 
and  would  nearly  if  not  entirely  disappear  with  the  introduc- 
tion of  insurance  against  unemployment.  As  has  been  said, 
it  is  the  almost  universal  testimony  of  those  in  charge  of  sickness 
insurance  societies  that  in  times  of  unemployment  a  large  increase 
occurs  in  the  demands  made  upon  their  funds,  due  in  part  to 
simulation,  and  in  part  to  applications  from  workingmen,  who 
have  been  physically  unfit  but  who  have  kept  at  work  as  long 
as  they  could  obtain  it.  Again,  where  compensation  statutes 
have  been  enacted,  duplication  of  benefits  occurs,  because  when 
workingmen  purchase  life  insurance  they  obtain  protection  against 
death  by  accident. 

Some  very  peculiar  conditions  are  created  by  this  absence 
of  a  complete  insurance  scheme.  In  Great  Britain  the  recent  Old 
Age  Pension  Act  provides  for  a  pension  at  seventy.  Invalidity, 
ordinarily  ascribed  to  old  age,  may  however  begin  at  a  period  much 
earlier  than  seventy,  and  in  fact,  total  and  permanent  disability, 
not  traceable  to  industrial  accident  or  occupational  disease,  is 
occasionally  found  at  all  ages.  In  consequence,  the  govern- 
ment will  be  compelled  to  provide  for  total  and  permanent  dis- 
ability at  all  ages  by  a  compulsory  contribution  scheme  such  as 
is  now  planned,  or  else  to  yield  to  a  demand  that  old  age  pensions 
should  be  granted  at  sixty-five  or  even  as  early  as  sixty. 

In  France,  the  idea  of  an  old  age  pension  law  was  not  at 
first  well  received,  owing  to  the  practice  there  in  vogue  of  provid- 

397 


TENDENCY   TOWARD   A   COMPLETE    SYSTEM 

ing  for  old  age  by  the  accumulation  of  funds  for  the  purchase 
of  annuities.  Neither  would  such  a  measure  have  proved  ac- 
ceptable unless  it  had  covered  total  and  permanent  disability 
beginning  at  an  earlier  period.  Accordingly,  arrangement  was 
made  for  a  pension  to  be  paid  by  the  state  and  the  communes 
jointly,  commencing  at  seventy  or  at  any  prior  age  in  event 
of  total  and  permanent  disability.  This  measure,  as  we  have  seen, 
has  now  been  supplemented  by  a  most  comprehensive  obligatory 
old  age  and  invalidity  pension  law.  It  would  be  possible  to  mul- 
tiply these  instances  if  necessary.  It  will  perhaps  suffice  to  say 
that,  even  if  at  first  the  desirability  of  installing  a  well  organized 
insurance  system  is  not  recognized,  once  legislation  of  this  char- 
acter has  been  introduced  an  almost  irresistible  force  impels  its  ex- 
tension and  development.  The  goal  seems  to  be  a  perfected  system 
under  which  it  will  not  be  possible  to  find  a  workingman  or  his 
family  in  distress,  because  of  temporary  or  permanent  cessation 
of  wages,  except  as  the  result  of  his  own  wilful  act. 

As  has  already  been  shown,  the  greatest  development  in 
this  direction  has  been  in  Germany.  It  is  sufficient  here  to  re- 
state as  briefly  as  possible  the  main  features  of  the  German 
system. 

First,  compulsory  insurance  against  sickness  in  societies  of 
a  democratic  type,  subject  to  the  control  of  their  members. 
Employes  contribute  two-thirds  of  the  entire  premium  income 
and  employers  one-third,  out  of  which  the  cost  of  medical 
treatment,  medicines,  hospital  treatment,  if  necessary,  and  a 
daily  sum  of  one-half  the  wages  usually  earned,  are  paid  during 
the  first  26  weeks  of  disability  caused  by  sickness,  and  during 
the  first  13  weeks  of  disability  caused  by  accident.  Membership 
in  these  societies  is  obligatory  upon  all  wage-earners.  A  choice 
is  open  to  workingmen  from  among  several  classes  of  societies  ; 
namely,  private  sickness  insurance  societies,  (to  which  the  em- 
ployer, however,  is  not  obliged  to  contribute);  establishment  funds 
connected  with  particular  factories  or  employers ;  trade  societies, 
such  as  exist  among  the  iron  trades  or  are  carried  on  by  labor 
unions;  and  communal  or  local  societies  which  must  receive  every- 
body not  insured  elsewhere.  The  compulsion  rests  upon  the  em- 
ployers, who  must  see  that  the  contributions  of  their  employes  as 

398 


TENDENCY   TOWARD   A   COMPLETE   SYSTEM 

well  as  their  own  are  paid.  Failing  this,  the  communal  sickness 
insurance  society  will  perform  its  part  precisely  as  if  the  employe 
had  been  a  member  and  will  collect  from  the  employer  the  benefits 
paid  and  all  the  back  premiums  due,  both  from  the  employe  and 
from  the  employer,  together  with  a  fine  which  may  in  case  of  con- 
tumacy be  pretty  large. 

Second,  having  by  their  contribution  to  sickness  societies  rid 
themselves  of  a  portion  of  their  legal  liability  for  the  consequences 
of  industrial  accidents,  employers  are  next  required  to  insure  in 
mutual  companies,  composed  of  employers  of  the  same  general 
class,  against  liability  for  the  consequences  of  industrial  accidents 
extending  beyond  13  weeks.  These  mutual  companies  ad- 
just all  claims,  fix  all  rates  of  premiums  and  otherwise 
conduct  their  own  business,  subject  only  to  supervision  of 
the  government.  Benefits  are  paid  in  periodical  instalments  to 
the  injured  workingman  if  he  continues  disabled  beyond  13 
weeks,  throughout  the  entire  period  of  his  disability,  and  to  his 
widow  during  her  widowhood.  His  orphans  receive  pensions 
until  they  reach  the  age  of  fourteen,  and  longer  if,  because  of 
feeble-mindedness  or  physical  incapacity,  they  are  not  capable  of 
self-support.  Provision  is  also  made  for  dependent  parents  and 
grandparents. 

Third,  a  workingman  disabled  otherwise  than  by  industrial 
accident,  remaining  partially  or  totally  incapacitated  longer  than 
26  weeks,  is  cared  for  by  the  invalidity  insurance  carried  on 
by  the  government,  which  maintains  a  fund  in  each  of  a  large 
number  of  districts,  usually  comprising  a  kingdom  of  the  empire. 
Provision  is  made  according  to  certain  fixed  rules  not  dependent 
upon  the  rate  of  wages  previously  received,  but  upon  the  length 
of  time  for  which  the  insured  has  paid  premiums  for  disability 
insurance,  benefits  continuing  throughout  the  lifetime  of  the  per- 
manently disabled  workingman.  Included  in  disability  insurance 
is  old  age  insurance.  Under  the  law  the  attainment  of  the  age  of 
seventy  is  taken  as  evidence  of  permanent  and  total  disability  and 
the  septuagenarian  workingman  is  automatically  entitled  to  a  cer- 
tain maximum  income,  if  he  has  paid  all  premiums  on  his  invali- 
dity insurance.  Toward  this  maximum  income  the  government 
makes  a  small  contribution  annually  in  addition  to  what  is  paid 

399 


TENDENCY    TOWARD    A    COMPLETE    SYSTEM 

from  the  invalidity  insurance  fund.  This  is  the  sole  contribution 
of  the  German  government  to  benefits  payable  under  any  portion 
of  its  scheme  for  the  support  of  workingmen  and  their  families. 
In  all  other  branches,  it  defrays  at  most  the  expenses  of  super- 
vision, deciding  appeals  and  collecting  statistics. 

At  the  present  time,  the  government  has  before  the  Reichs- 
tag a  proposal*  planned  on  lines  similar  to  the  invalidity  insur- 
ance scheme,  for  providing  annuities  to  widows  and  orphans 
of  workingmen  whose  deaths  are  caused  otherwise  than  by  occu- 
pational accidents.  Cost  of  these  annuities,  as  in  the  case  of 
invalidity  insurance,  is  to  be  met  one-half  by  the  employer  and 
one-half  by  the  employe,  and  is  to  be  taxed  upon  all  employes 
whether  men  or  women,  married  or  single.  Unlike  benefits  to 
orphans  under  the  employers'  liability  insurance  laws,  none  will  be 
payable  to  illegitimate  children.  If  the  present  program  is  carried 
into  effect  it  should  encourage  marriage  and  the  birth  of  children 
in  wedlock,  since  unmarried  men  and  women  must  pay  their  pro- 
portionate part  of  the  cost,  and  yet  are  excluded  from  any  direct 
or  indirect  share  in  the  benefits  until  married. 

This  German  program  comes  nearer  to  a  complete  and 
perfected  scheme  of  social  insurance  than  any  planned  or  proposed 
elsewhere.  Austria,  however,  as  has  been  shown,  is  contemplating 
very  nearly  the  same  thing. 

Insurance  measures  proposed  in  the  near  future  in  Great 
Britain  are  also  worthy  of  recapitulation.  At  the  present  time 
there  are  but  two  forms  of  workingmen's  insurance  legislation  in 
that  country;  namely,  the  Workmen's  Compensation  Act,  providing 
for  the  payment  of  a  lump  sum  in  event  of  death  by  occupational 
accident  or  disease,  and  payment  of  weekly  benefits  in  event  of 
total  or  partial  disablement,  whether  temporary  or  permanent,  be- 
cause of  occupational  accident  or  disease,  for  which  the  employer 
is  held  primarily  and  immediately  liable;  and  the  Old  Age  Pension 
Act,  insuring  a  pension  for  all,  except  criminals  and  paupers,  who 
attain  the  age  of  seventy  and  do  not  enjoy  an  income  from  other 
sources  greater  than  a  certain  sum.  It  is  now  proposed  to  provide 
for  sickness  and  temporary  or  permanent  disability,  whether  total 

*  For  complete  statement  of  proposed  plan,  see  Chapter  XVIII,  The 
Reform  Project  in  Germany,  p.  406. 

400 


TENDENCY   TOWARD   A   COMPLETE    SYSTEM 

or  partial,  arising  from  causes  other  than  occupational  accidents 
or  diseases,  by  some  means  which  will  utilize  friendly  societies  and 
the  insurance  facilities  of  trade  unions  and  which  will  call  for  com- 
pulsory contributions  both  by  employers  and  employes. 

A  scheme  of  insurance  against  involuntary  unemployment 
is  also  under  consideration,  to  be  carried  on  by  means  of  funds 
under  state  supervision.  These  are  to  be  collected  in  certain 
districts  and  disbursed  there,  unless  a  surplus  exists  in  one  dis- 
trict that  can  be  drawn  upon  for  deficiency  in  another.  These 
funds  are  to  be  supported  by  compulsory  contributions  from  em- 
ployes and  employers,  with  a  subsidy  from  the  state,  the  latter 
becoming  responsible  for  supervision  and  management. 

England  is  here  in  advance  of  Germany,  and  excellent  as 
the  latter's  system  of  protection  is,  much  remains  to  be  done 
before  it  will  be  complete.  Thus,  for  instance,  unemployment 
insurance  on  a  compulsory  basis  has  not  yet  been  brought  forward 
for  the  consideration  of  the  Reichstag.  But,  as  said  above,  where- 
ever  the  new  principles  have  been  accepted  and  initial  legisla- 
tion introduced,  the  tendency  is  toward  a  correlated  system.  It 
is  now  conceded  by  statesmen  and  men  of  affairs  in  nearly  all 
countries,  many  of  whom  were  at  one  time  much  opposed  to  any- 
thing which  savored  of  compulsion,  that  it  is  to  be  desired  as  well 
as  expected.  So  remarkable  has  been  the  development  of  the 
"compulsory"  insurance  idea  in  Europe  even  within  the  last  five 
years,  that  more  than  a  passing  word  of  explanation  is  necessary, 
particularly  in  view  of  the  absence  of  a  clear  understanding  of  the 
subject  in  the  United  States. 

In  Europe,  particularly  in  the  Germanic  countries,  compulsion 
is  not  a  code  of  mandatory  laws  but  the  highest  development  of 
an  ethical  principle.  "Compulsion"  or,  to  use  a  better  term, 
"obligation"  in  Germany  and  Austria,  in  Luxemburg  and  in 
some  of  the  other  more  northern  countries,  implies  the  recog- 
nition of  a  responsibility  which  rests  on  all  citizens  alike; 
namely,  the  responsibility  of  providing  against  the  ordinary 
risks  of  life.  Obligation,  as  understood  by  the  more  en- 
lightened in  these  countries,  is  not  coercion.  It  is  not  a  police- 
man with  his  club.  It  is  not  a  form  of  benevolent  paternalism 
foisted  on  an  unwilling  public  by  the  powers  that  be,  and  made 
26  F  401 


TENDENCY   TOWARD   A   COMPLETE    SYSTEM 

possible  by  centuries  of  education  in  military  discipline  and  obe- 
dience. Mandatory  legislation  is  not  an  attribute  of  a  monarchical 
or  despotic  form  of  government.  It  is  known  even  in  a  republic. 
In  fact,  it  is  fundamental  in  our  theory  of  government  that  the 
minority  must  bow  to  the  will  of  the  majority  in  all  that  affects 
the  common  welfare.  The  essential  difference  between  the 
United  States  and  countries  in  which  compulsory  insurance  has 
obtained  a  foothold  is  the  absence  of  recognition  of  any  need  for 
this  form  of  protection  for  its  inhabitants,  and  particularly  for 
those  nearest  to  the  border  line  between  economic  dependence 
and  economic  independence. 

In  certain  instances  we  have  adopted  the  compulsory 
principle  in  our  own  legislation.  Under  the  laws  of  nearly 
all  states  the  support  of  wife  and  children  is  made  obligatory 
on  the  husband  and  father.  Deliberate  neglect  of  this  obliga- 
tion is  classed  as  a  misdemeanor  and  in  one  state  at  least,  aban- 
donment of  children  by  the  parent  and  neglect  to  support  them 
has  been  made  a  felony.  There  are  many  statutes  which  direct 
the  acts  a  citizen  may  perform,  but  there  are  as  many  others 
which  explicitly  forbid  other  acts  of  commission  or  omission. 
The  police  laws  of  most  states  restrict  individual  action  within  cer- 
tain definite  limits,  and  forbid  voluntary  initiative  which  may 
adversely  affect  public  health,  public  safety  or  the  public  weal. 
Laws  are  daily  being  enacted,  miscalled  socialistic  or  paternal, 
which  on  closer  analysis  are  found  to  be  no  more  than  an  expression 
of  intention  on  the  part  of  the  state  to  safeguard  the  welfare 
of  all  citizens,  irrespective  of  their  economic  status. 

Fundamentally,  no  more  than  this  has  been  done  in  Ger- 
many and  other  European  countries  which  have  introduced 
compulsory  insurance.  These  have  recognized  that  there  are 
risks  in  life,  common  to  all  workingmen,  against  which  it  is  im- 
possible for  the  individual  alone  to  make  provision.  Only  by  the 
transfer  of  this  risk  from  the  shoulders  of  the  one  to  the  backs 
of  the  many  and  by  placing  the  burden  of  cost  where  it  should 
rest,  even  though  this  involve  the  industry  itself,  can  equilibrium 
be  maintained.  In  other  words  where  we,  after  an  observation 
of  a  century,  and  England  of  several  centuries,  have  grudg- 
ingly admitted  the  desirability  of  protection  through  insurance, 

402 


TENDENCY   TOWARD   A    COMPLETE    SYSTEM 

and  through  legislation  have  permitted  individuals  to  avail 
themselves  of  the  benefits  of  it,  Europe,  as  typified  by  Germany 
and  her  sister  states,  has  boldly  declared  the  urgent  need  of  this 
protection,  not  for  the  few  but  for  all  of  its  working  population, 
and  by  legislation  has  required  its  workingnren  to  partake  of  it, 
and  its  employers  to  bear  their  just  share  of  the  cost. 

So  much  for  fundamentals.  In  actual  practice,  Germany 
and  her  followers  have  gone  still  further.  Not  only  has  the  need 
of  insurance  for  the  great  body  of  wage-earners  been  recognized 
and  incorporated  into  social  legislation,  but  in  addition  thereto, 
the  methods  under  which  this  protection  shall  be  afforded  have 
been  definitely  laid  down.  Possibly  here  may  be  found  the  weak- 
ness of  the  system  from  the  American  standpoint.  A  prescribed 
method  of  administration  which  in  the  minds  of  many  might  allow 
for  no  liberty  of  action,  and  in  its  final  development  may  become 
bureaucratic  and  oppressive,  might,  perhaps,  not  be  welcomed  by 
employers  in  the  United  States. 

There  are  side  lights  on  the  situation  in  Germany  and  other 
countries.  Not  the  least  interesting  of  these  are  the  significant 
remarks  made  by  Dr.  Zacher,  the  well  known  authority  on  work- 
ingmen's insurance,  in  his  report  in  1908  to  the  International 
Congress  on  Workingmen's  Insurance  at  Rome.  After  summar- 
izing the  results  of  twenty-five  years  of  legislation  in  Germany  Dr. 
Zacher  concludes  with  what  may  be  termed  a  hope  that  the  future 
development  of  workingmen's  or  social  insurance  may  combine 
the  German  principle  of  compulsion  with  the  Roman  principle 
of  liberty.  To  quote  from  his  report: 

"Regarding  the  advantages  and  disadvantages  of  the 
two  systems,  there  are  still  wide  differences  of  opinion.  It 
was  said  with  much  justice  at  the  Congress  held  in  Vienna  in 
1905,  by  Leopold  Mabilleau,  who,  for  many  years,  has  been  the 
exponent  of  the  Roman  principle  of  liberty,  that  from  the 
ethical  standpoint  it  were  far  better  for  the  individual  to  insure 
himself  voluntarily  than  to  be  driven  to  insurance;  that  volun- 
tary insurance  in  contrast  to  compulsory  insurance  is  in  a  better 
position  to  meet  personal,  local  and  occupational  differences  and 
that  abuse  is  less  likely  to  occur.  With  equal  justice,  however, 
Schmoller  and  others  have  shown  that  voluntary  insurance  exerts 
its  influence  mainly  on  the  intellectual  and  better  circumstanced 

403 


TENDENCY   TOWARD   A   COMPLETE    SYSTEM 

strata  of  society  but  rarely  on  the  lower  strata  who  most 
require  it.  It  is  these  latter  who  need  the  educational  value  of 
insurance  and  since  they  do  not  obtain  it  under  a  voluntary 
system  the  practical  results  are  behind  those  of  compulsory 
insurance. 

"The  question  arises,  therefore,  whether  it  would  not  be 
possible  in  the  subsequent  extension  of  insurance  to  all  classes 
of  society  that  need  this  form  of  protection,  to  combine  the  best 
elements  of  the  German  principle  .of  compulsion  and  the  Roman 
principle  of  volition  into  a  higher  and  better  form  of  insurance 
than  either  has  yet  reached. 

"In  general,  the  opinion  prevails  in  Germany,  as  a  result  of 
the  compulsion  which  has  been  tried  there,  that  obligatory 
insurance  should  be  limited  to  the  'unselbstandige';  that  is, 
it  should  include  all  wage-earners,  clerks,  etc.,  having  an  earning 
capacity  yearly  up  to  3000  marks,  but  that  all  other  persons 
receiving  a  salary  up  to  5000  marks  should  be  insured  on  the 
voluntary  basis.  It  does  not  seem  desirable  to  have  a  compul- 
sory form  for  this  stratum  of  society.  Social  insurance  based  on 
this  idea  would  have  approximately  the  following  form: 

"i.  Workmen:  compulsory  insurance  without  regard  to  the 
amount  of  wages. 

"2.  Clerks  and  home  industrial  workers:  compulsory  insur- 
ance up  to  3000  marks  annual  earnings;  voluntary  insurance  up  to 
5000  marks. 

"3.  Small  contractors,  journeymen,  etc.:  voluntary  insur- 
ance up  to  5000  marks. 

"  Such  insurance,  since  it  would  include  the  dependents  of 
the  insured,  would  cover  the  larger  percentage  of  the  population 
and  could  rightly  be  called  people's  insurance  (Volks-versich- 
erung).  The  social  and  economic  value  of  this  insurance  would 
be  materially  increased,  if  to  those  who  are  compulsorily  insured, 
the  principle  of  'state-help  towards  self-help'  were  to  be  more 
largely  applied  and  if  assistance  were  given  to  voluntary  insur- 
ance associations  through  subsidies  and  contributions,  either  from 
the  state  or  from  private  individuals.  It  is  precisely  because  the 
German  compulsory  system  includes  the  employers  and  removes 
from  the  employes  the  larger  part  of  the  cost  of  the  insurance, 
that  the  German  workingmen  are  in  a  position  to  develop  a 
much  finer  form  of  insurance  than  that  of  their  fellows  in  other 
countries." 

The  Congress  at  Rome  will  be  memorable  in  the  annals  of 
workingmen's  insurance.  One  session  in  particular  was  dra- 
matic in  its  intensity.  In  some  respects  it  resembled  an  old- 

404 


TENDENCY   TOWARD   A   COMPLETE   SYSTEM 

• 

fashioned  religious  revival  meeting.  Doughty  campaigners  like 
Luzzatti  of  Italy  and  Mabilleau,  Millerand  and  Paulet,  of 
France,  who  at  previous  congresses  had  fought  persistently 
for  the  principle  of  voluntary  insurance,  as  applied  to  sickness, 
old  age,  and  invalidity,  admitted  their  conversion  to  the  doctrine 
of  compulsion  or  obligation.  But  their  change  of  heart  ended 
here.  Having  acknowledged  the  weakness  of  every  voluntary 
system,  owing  to  the  fact  that  the  masses  of  population  are  not 
reached,  each  of  the  speakers  demanded  that  in  any  compulsory 
system  of  insurance  the  greatest  liberty  should  be  permitted  as  to 
methods  of  administration. 


405 


XVIII 

THE  REFORM  PROJECT  IN  GERMANY 

DESPITE  the  wide  development  of  workingmen's  insurance 
in  Germany,  the  insurance  authorities  have  been  engaged 
for  years  in  planning  improvements  in  the  system.    At  the 
present  time,  they  have  presented  to  the  Reichstag  a  proposed 
new  code  of  laws  covering  the  existing  branches  of  insurance  and 
extending    the   field    in  various    directions.      The  bill   makes   a 
large  volume  containing  no  less  than  1,783  articles.    It  will,  there- 
fore, be  possible  only  to  summarize  the  more  important  modifica- 
tions which  the  project  proposes. 

The  government  has  finally  abandoned  the  idea  of  uniting  into 
one  system  the  three  types  of  insurance;  namely,  that  against 
sickness,  accident  and  invalidity.  It  recognizes  the  necessity  of 
maintaining  the  independence  of  the  different  insurance  institu- 
tions which  have,  over  a  long  period  of  years,  adapted  themselves  so 
completely  to  the  needs  of  workingmen  and  employers.  It  has 
attempted,  however,  to  obtain  more  co-operation  among  the 
different  organizations  by  simplifying  the  complex  administration 
and  organizing  one  central  system  of  control.  With  this  object 
in  view,  the  bill  creates  one  set  of  insurance  authorities  through- 
out the  country  for  all  types  of  insurance.  These  consist  of 
local  offices,  superior  state  offices  and  the  imperial  office. 

Local  offices  regulate  local  insurance  affairs  and  may  be 
attached  to  communal  or  national  administrations  or  may  act 
independently.  As  the  first  method  is  more  economical,  it  will 
probably  be  preferred  by  the  various  states.  Each  local  office  is 
presided  over  by  an  administrator  of  insurance  (Versicherungs- 
Amtmann)  who  is  a  public  official.  He  is  to  be  assisted  by  a  board 
of  ten  representatives  of  employers  and  ten  of  workingmen,  the 
latter  elected  by  the  directors  of  sickness  societies  of  the  district. 
Service  on  these  boards  is  obligatory.  In  addition,  each  local 

406 


THE    REFORM    PROJECT   IN    GERMANY 

office  is  to  have  a  judicial  commission  whose  function  it  will  be  to 
decide  upon  matters  referred  to  it  by  imperial  order  or  by  law. 
These  commissions  are  each  composed  of  the  president  of  the 
board,  two  employers  and  two  workingmen.  There  is  also  to  be 
connected  with  each  office  a  committee  for  the  adjustment  of  dis- 
putes between  sickness  societies  and  their  physicians,  dentists  and 
druggists.  These  local  boards  have  most  important  responsibilities. 
They  exercise  control  over  sickness  societies  and  settle  all  disputes 
arising  in  their  administration.  They  also  fix  the  amount  of 
pensions  and  decide  upon  the  modifications  or  discontinuance  of 
pensions  for  accidents,  for  invalidity  or  to  widows  and  orphans 
They  receive  applications  for  pensions,  examine  and  discuss 
them  verbally  with  the  applicants,  aiding  the  latter  with  counsel 
and  recommend  to  the  insurance  society  concerned  the  specified 
amount  of  benefit  to  be  paid.  Their  decisions  as  to  pensions, 
however,  may  be  appealed  to  the  superior  state  insurance  offices. 
Expenses  of  the  local  offices  are  borne  in  part  by  the  communes 
and  in  part  by  the  three  groups  of  insurance  societies  and  asso- 
ciations of  the  district. 

The  superior  insurance  offices  which  take  the  place  of  the 
former  "arbitration  boards"  may  be  established  as  independent 
bodies  or  may  be  attached  to  the  state  administrations.  Each 
office  is  composed  of  a  director  appointed  for  life  with  at 
least  one  permanent  member  assisting  him.  These  are  aided  by 
representatives  of  employers  and  workingmen  in  equal  numbers 
elected  by  the  boards  of  the  local  offices.  The  superior  office 
entrusts  its  work  to  committees  each  composed  of  the  director  or 
the  permanent  member  and  of  four  representatives  of  employers 
and  workingmen.  These  decide  on  special  matters  which  come  up 
for  decision  and  appeal  from  the  local  offices  of  the  state.  Expenses 
of  the  superior  offices  are  borne  by  the  state  and  the  insurance 
societies  and  associations.  Decisions  rendered  by  the  various  com- 
mittees of  the  superior  offices  are,  in  the  large  majority  of  cases 
final.  In  case  of  sickness,  for  example,  no  further  appeal  is  allowed 
in  all  matters  in  which  the  amount  of  benefit  is  involved.  In  cases 
of  accident,  decisions  are  final  in  matters  of  temporary  indemnity, 
pensions  to  survivors,  small  pensions  or  expenses  of  procedure. 
In  case  of  invalidity  and  of  widows'  and  orphans'  pensions  further 

407 


THE    REFORM    PROJECT   IN   GERMANY 

revisions  are  excluded  when  it  is  a  question  of  the  duration  or 
of  the  amount  of  pension,  of  the  redemption  of  contributions,  of 
benefits  to  widows  and  orphans.  Considerable  relief,  therefore, 
will  be  afforded  the  Imperial  Insurance  Office. 

The  imperial  body  will  be  concerned  with  none  of  the  smaller 
details  of  appeal  as  heretofore,  but  rather  with  the  interpretation  of 
the  law  and  the  more  important  financial  matters.  This  insurance 
office  is  to  be  constituted  as  at  present;  i.  e.,  of  active  and  associate 
members  the  latter  representing  both  employers  and  workingmen. 

The  most  important  modifications  are  proposed  in  the  field 
of  sickness  insurance.  The  bill  extends  obligatory  insurance  to 
agricultural  laborers  and  managers,  farm  hands,  domestic  servants 
state  employes,  laborers  wth  irregular  employment,  peddlers, 
druggists  and  drug  clerks,  stage  and  orchestra  members,  teachers 
and  tutors;  in  short,  to  all  whose  wages  or  salary  do  not  exceed 
2000  marks  ($500)  a  year.  In  addition,  it  grants  to  the  Federal 
Council  the  right  to  extend  insurance  to  certain  callings  and  in 
certain  districts,  to  include  employers  who  do  not  regularly  em- 
ploy at  least  two  persons  obliged  to  insure. 

The  sickness  insurance  societies  are  to  be  completely  reorgan- 
ized. Communal  sickness  insurance  societies  (Gemeindekran  k- 
enkassen)  are  to  be  entirely  abolished.  In  their  place,  imperial 
sick  clubs  (Landkrankenkassen)  are  created  to  serve  the  large 
group  of  workers,  i.  e.,  those  engaged  in  agriculture,  domestic  ser- 
vice, etc.,  newly  included  by  the  law.  These  societies  together 
with  the  recognized  local  sickness  societies  (Ortskrankenkassen)  are 
to  serve  as  authorized  agencies  of  sickness  insurance.  It  is 
planned  at  the  same  time  to  preserve  such  of  the  existing  com- 
munal societies  as  have  a  large  membership  and  are  of  recognized 
efficiency.  These  must  have  at  least  500  members  each  and  must 
grant  benefits  fully  equal  to  those  which  the  imperial  sick  clubs 
guarantee.  The  state  may  also,  in  certain  cases,  demand  that  a  local 
club  contain  a  membership  of  at  least  3000  and  in  some  instances 
of  at  least  10,000.  This  would  destroy  90  per  cent  of  the  com- 
munal societies.  It  is  likely,  therefore,  that  the  proposal  will 
meet  with  strong  opposition. 

Factory  sick-clubs  (Betriebskrankenkassen)  are  also  much 
restricted.  The  existing  societies  may  continue  if  they  have  a 

408 


THE    REFORM  PROJECT   IN    GERMANY 

membership  of  at  least  250  and  grant  benefits  fully  equal  to  those 
given  by  the  imperial  sickness  societies.  New  ones  may  be  created 
for  at  least  500  workers  but  the  state  may  reduce  this  number 
under  certain  conditions.  The  large  majority  of  these  societies 
will  be  unable  to  meet  these  requirements  and  will,  therefore, 
completely  disappear. 

The  trade-guild  sickness  societies  (Innungskrankenkassen) 
are  not  much  changed.  No  minimum  of  membership  is  imposed 
upon  them,  but  they,  too,  must  give  as  large  benefits  as  the  im- 
perial societies.  Miners'  sickness  societies  are  unaffected.  Mutual 
aid  societies  (Hilfskrankenkassen)  are  hereafter  to  bear  the  name 
of  subsidiary  sickness  societies  (Ersatzkrankenkassen)  and  may 
continue  to  insure  against  sickness,  but  under  conditions  much 
more  restricted  than  heretofore. 

In  accordance  with  the  general  tendency  toward  the  central- 
ization of  sickness  societies,  the  bill  specially  encourages  the  union 
in  each  district  of  separate  organizations  into  one  large  society. 
The  government  hopes  in  this  way  to  avoid  the  weakness  of  the 
small  competing  societies  and  to  encourage  the  formation  of  large 
and  powerful  associations,  such  as  are  in  operation  in  Leipsic  and 
Dresden.  In  general,  all  sickness  societies  must  hereafter  furnish  the 
same  benefits  which  are  now  granted  by  the  local  societies.  The 
only  exception  is  in  regard  to  those  classes  of  workingmen  to  whom 
insurance  is  newly  extended  by  the  project.  Thus,  agricultural 
workers  may  receive  reduced  benefits  from  October  i  to  March  31, 
premiums  for  the  same  period  being  correspondingly  reduced. 
In  the  case  of  domestics,  the  employer  is  required  to  pay  wages 
during  the  period  of  illness  of  the  insured  and  may  deduct  the 
amount  of  sick  benefit  from  the  wages.  Similar  restrictions  are 
made  in  the  benefits  of  other  classes.  In  response  to  the  active 
campaign  for  maternity  insurance,  the  project  extends  the  period 
of  benefit  to  women  in  confinement  from  six  to  eight  weeks.  Of 
this  period,  six  of  the  weeks  during  which  benefits  are  paid  must 
be  after  child-birth.  Sickness  insurance  societies  are  also  permitted 
to  expend  part  of  their  funds  for  education  in  prevention  of  sick- 
ness and  accident. 

The  management  of  the  sickness  societies  is  also  put  upon 
an  entirely  new  basis.  The  unequal  representation  of  employers 

409 


THE    REFORM    PROJECT   IN    GERMANY 

and  employed,  i.  e.,  two-thirds  of  the  former  and  one-third  of 
the  latter,  is  to  be  discontinued.  Equality  is  to  be  established 
both  in  this  matter  and  in  the  payment  of  premiums.  Each  is 
to  pay  half.  Instead  of  the  former  general  assembly,  there  is 
to  be  a  board  of  directors  composed  of  50  members,  25  repre- 
senting employers  and  25  representing  employes.  Acceptance  of 
office  and  performance  of  duties  are  obligatory.  The  presiding 
officer  of  the  board  of  directors  is  chosen  from  and  by  the  mem- 
bers of  the  board  and  must  receive  a  majority  of  votes  of  the 
representatives  of  both  employers  and  employes.  If  two  successive 
ballotings  do  not  result  in  an  election,  the  local  insurance  office  may 
designate  one  of  its  own  representatives  who  will  preside  until  a 
satisfactory  election  shall  have  taken  place.  By  this  means  it 
is  expected  that  the  recent  socialistic  tendencies  in  the  adminis- 
tration of  sickness  societies  will  be  checked.  As  has  been  pointed 
out,  employers  and  employes  are  to  contribute  equally.  Pre- 
miums are  to  be  calculated  in  general,  according  to  the  occupation 
of  the  member,  with  special  reference  to  the  danger  of  sickness 
of  his  class. 

The  measure  regulates  in  detail  the  relations  between  the 
sickness  societies  and  physicians  and  druggists.  Free  choice  of 
physician  is  permitted,  but  as  in  the  present  law,  the  board  may 
appoint  physicians  or  permit  limited  free  choice.  When  the 
choice  seems  too  limited,  the  superior  insurance  office  has  the 
power  to  increase  the  number  of  physicians  and  druggists.  Any 
disputes  arising  between  the  sickness  society  and  physicians  or 
druggists,  are  settled  by  the  committee  of  arbitration  of  the  local 
insurance  offices,  and  if  still  dissatisfied,  either  party  may  carry 
the  matter  to  the  arbitration  committee  of  the  superior  insurance 
office. 

Few  modifications  are  made  in  the  existing  accident  in- 
surance law.  Those  engaged  in  construction  and  hydraulic  work, 
now  protected  by  a  special  law,  are  hereafter  to  come  under  the 
general  law.  Insurance  is  extended  to  those  engaged  in  storage, 
in  trucking,  to  owners  of  riding  academies  and  livery  stables 
and  to  keepers  of  vehicles  of  all  sorts.  In  general,  it  may  be 
said,  that  all  wage-earners  are  to  be  obligatorily  insured  except 
those  engaged  in  office  work  or  as  traveling  salesmen. 

410 


THE    REFORM    PROJECT   IN    GERMANY 

Another  important  modification  of  the  accident  insurance  law 
is  the  elimination  of  small  permanent  pensions.  Those,  for  example, 
which  amount  to  less  than  one-fifth  of  the  earnings  must  be  paid 
only  for  a  given  time  and  then  be  automatically  discontinued.  In 
order  to  prevent  the  injured  from  drawing  accident  benefits  in 
addition  to  wages,  benefits  are  withdrawn  in  cases  where  the 
total  income  of  the  injured  workman  is  more  than  it  was  before  the 
accident.  He  must  also  accept  employment  when  offered  him,  at 
work  which  he  can  perform.  The  long  standing  complaint  of  work- 
ingmen  that  the  determination  of  the  amount  of  pension  in  the  first 
instance  is  made  entirely  by  employers  is  remedied  under  the  pro- 
posed law.  Compensation  is  to  be  fixed  by  the  local  insurance  offices, 
in  which  representatives  of  the  workingmen  have  an  equal  voice. 

The  most  significant  change  is  with  reference  to  the  financial 
management  of  the  mutual  associations  of  employers.  Each 
association  must  form  a  reserve  fund.  This  is  to  be  accumulated 
in  accordance  with  the  provisions  of  the  law  of  1900  so  that  at 
the  end  of  twenty  years,  the  total  assets  shall  be  three  times  the 
amount  paid  in  annuities.  The  state  also  demands  that  at  least  one- 
quarter  of  the  capital  of  the  associations  be  invested  in  federal  or 
state  securities.  No  capitalized  value  reserve  is  provided  for. 

Insurance  against  invalidity  and  old  age  is  extended  by  the 
project  to  include  insurance  for  widows  and  orphans.  By  this 
means,  a  workingman  will  be  enabled,  through  the  payment 
of  a  small  additional  sum  to  his  premium  for  invalidity  and  old 
age  insurance,  to  protect  his  wife  and  children  in  the  event  of  his 
death.  A  widow's  pension  is  to  be  paid  only  if  the  husband 
had  completed  the  waiting  period  necessary  for  the  receipt  of  an 
invalidity  pension  and  if  the  widow  herself  is  incapacitated. 
Pensions  to  orphans  are  granted  to  legitimate  children  under 
fifteen  years  of  age.  These  pensions  to  survivors  are  paid  only 
in  case  of  indigence  and  can  be  withdrawn  as  soon  as  this  con- 
dition ceases.  A  pension  to  a  widow,  moreover,  may  be  with- 
drawn when  she  is  no  longer  incapacitated  and  medical  treatment 
may  be  given  in  order  that  her  invalidity  may  be  terminated. 

The  total  pensions  given  to  all  the  survivors  of  an  insured 
workingman  must  not  exceed  a  sum  equal  to  one  and  one-half  times 
the  invalidity  pension  which  he  was  receiving  or  would  have  re- 

411 


THE    REFORM    PROJECT    IN  GERMANY 

ceived  had  he  been  disabled.  When  orphans  are  the  only 
survivors,  their  total  pension  must  not  exceed  the  amount  of  the 
invalidity  pension  of  the  deceased  father.  The  individual  pensions 
are,  therefore,  much  smaller  than  the  invalidity  pensions  of 
workingmen.  They  are  composed  of  an  imperial  subvention,  of 
a  fundamental  or  basic  sum  and  of  additional  bonuses  propor- 
tionate to  the  contributions  of  the  deceased.  The  imperial  sub- 
vention is  equal  to  50  marks  ($12.50)  yearly  for  each  widow's 
pension  and  to  25  marks  ($6.25)  for  each  orphan's  pension. 
The  fundamental  or  basic  sum  plus  the  proportional  bonus  for 
the  widow  are  equal  to  three-tenths  of  the  corresponding  parts  of 
the  invalidity  pension  which  the  insured  was  receiving  or  would 
have  received  at  the  time  of  his  death.  The  pension  for 
orphans  is  equal  to  three-twentieths  of  the  basic  sum  and  the 
bonus,  combined,  of  the  invalidity  pension  of  the  deceased  for 
one  orphan,  and  to  one-fortieth  for  each  additional  orphan. 

The  project  will  also  encourage  married  women  to  insure 
voluntarily  against  invalidity  and  widowhood  for  additional 
amounts.  If  a  woman  thus-insured  has  made  sufficient  payments 
to  meet  the  required  waiting  time  for  an  invalidity  pension,  she 
would,  if  incapacitated,  receive,  at  the  death  of  her  husband,  a 
much  larger  sum  than  that  granted  as  a  widow's  pension.  In 
such  a  case,  however,  the  regular  widow's  pension  to  which  she  is 
entitled  would  not  be  paid  in  addition  to  her  invalidity  pension ; 
but  in  its  stead  she  would  receive  what  is  called  widow's 
aid  (Witwengeld).  This  consists  of  a  lump  sum  equal  to  twelve 
monthly  payments  of  the  widow's  pension  of  her  class  and  50 
marks  ($12.50)  additional  from  the  state. 

The  law  also  permits  widows  to  make  special  provision 
(Waisenaussteuer)  for  their  orphaned  children.  Through  small 
contributions  for  each  child  who  has  reached  the  fifteenth 
year,  they  can  provide  small  dowries  for  girls  or  endowments 
for  boys  when  the  latter  quit  school  and  wish  to  take  up  a  trade. 
These  benefits  amount  in  each  case  to  eight  monthly  payments 
of  the  regular  orphan's  pension  to  which  the  child  is  entitled 
and  an  additional  contribution  from  the  state  of  i6f  marks  ($4.16). 

A  widower  whose  income  is  below  a  certain  sum  may  also 
receive  a  pension  at  the  death  of  his  insured  wife  if  the  latter, 

412 


THE    REFORM    PROJECT    IN   GERMANY 

because  of  her  husband's  invalidity,  supported  the  home  by  her 
earnings,  provided  she  had  paid  contributions  for  the  proper 
waiting  time.  After  her  death  a  pension  is  also  given  to  her 
orphaned  children  until  they  are  fifteen  years  of  age  if  the  family 
income  is  below  a  certain  sum. 

As  has  been  pointed  out,  the  receipt  of  the  above  benefits 
is  conditional  upon  an  increase  in  the  premiums  now  payable  for 
invalidity  and  old  age  insurance.  The  following  figures  show  the 
necessary  total  contributions  (employers  and  workmen  each  pay- 
ing half)  covering  invalidity,  old  age,  and  widow's  and  orphans' 
insurance,  for  each  one  of  the  five  wage  classes  at  present  rec- 
ognized in  the  invalidity  insurance  law.* 

TABLE    144. — PROPOSED   CONTRIBUTIONS    FOR   OLD    AGE   AND     INVA- 
LIDITY   INSURANCE    IN   REFORM    PROJECT,    GERMANY. 

Wage  Wages 

Class  (Marks) 

I Up  to  350:  16  pfennige  per  week  instead  of  14 

II 351-  550:  24  "  "  "      "      "  "  20 

III 551-  850:  30  "  "  "      "      "  "24 

IV 851-1150:  38  "  "      '  "  30 

V over  1 1 50:  46  "  "  "      "      "  "  36 

An  attempt  was  also  made  to  extend  old  age  and  invalidity 
insurance  to  workingmen  receiving  larger  wages,  and  to  give  them 
larger  benefits.  The  project  does  not  incorporate  this  suggestion 
but  instead  makes  possible  the  increase  of  pensions  to  the  classes  al- 
ready insured  through  the  payment  of  additional  voluntary  con- 
tributions on  their  part.  The  unit  of  the  additional  contribution 
is  one  mark  and  for  each  individual  stamp  of  this  value,  the 
amount  of  two  pfennige  is  granted  as  a  yearly  additional  sum 
payable  for  as  many  years  as  have  passed  from  the  purchase  of 
the  stamp  up  to  the  beginning  of  invalidity.  If,  for  example,  one 
should  pay  one  mark  (25  cents)  every  month  from  the  twenty-fifth 
year  of  age  and  invalidity  should  begin  at  the  age  of  fifty-six,  the 
supplementary  pension  would  amount  to  119.04  marks  (129.76). 
Should  the  invalidity  begin  at  the  age  of  sixty-five  and  no  further 
payments  be  made  after  the  age  of  fifty-six,  the  supplementary 
pension  will  then  amount  to  186  marks  ($46.50).  If  the  addi- 
tional pension  is  not  larger  than  60  marks  ($15)  the  person  entitled 
thereto  may  receive  the  value  of  the  same  in  one  lump  sum. 

*See  Old  Age  and  Invalidity  Insurance  in  Germany,  page  348. 
413 


XIX 
THE  REFORM  PROJECT  IN  AUSTRIA 

FROM  the  preceding  sections  on  accident,  sickness,  and  in- 
validity insurance,  it  is  clear  that  the  Austrian  system  of 
obligatory  insurance  is  far  from  complete.  This  has  been 
recognized  for  many  years  by  the  authorities  as  well  as  by  the 
public  at  large  and  an  active  campaign  has  been  carried  on 
to  secure  its  extension.  After  considerable  investigation,  the 
government  on  December  9,  1904,  presented  a  measure  to  the  two 
chambers  of  parliament,  which,  though  modestly  entitled  A 
Program  for  the  Reform  and  Development  of  Workingmen's 
Insurance,  is  an  elaborate  project  destined,  after  further  develop- 
ment, to  replace  the  several  laws  now  in  force.  In  its  present  form, 
the  plan  includes  revisions  of  the  existing  systems  of  sickness  and 
accident  insurance  and  an  entirely  new  plan  for  invalidity,  old  age 
and  widows'  and  orphans'  insurance.  It  is  assumed  that  these 
three  types  of  insurance  will  remain  distinct  throughout,  each 
under  its  own  organization. 

In  the  field  of  compulsory  sickness  insurance,  public  opinion 
has  demanded  the  extension  of  the  system  to  include  agricultural 
workers,  servants,  persons  engaged  in  home  industries  and  in 
the  smaller  industries.  The  reform  project  has  been  compelled, 
however,  to  make  several  important  restrictions.  It  includes  all 
regular  wage-earners  and  excludes  many  other  classes.  Thus, 
all  whose  monthly  salaries  or  wages  are  over  200  kronen  ($40) 
or  whose  annual  salaries  are  over  2400  kronen  (1480)  are  ex- 
cluded, as  are  also  the  temporary  employes,  and  farmers  and 
foresters  not  subject  to  the  regulations  of  domestics.  In  spite  of 
these  limitations,  it  is  hoped  that  the  reform  will  comprise  fully 
5,200,000  persons  in  place  of  the  2,800,000  now  included,  and  will 
offer  facilities  for  voluntary  insurance  to  the  classes  which  are 
not  required  to  insure.  The  administration  aims  to  limit  the  es- 

414 


THE    REFORM    PROJECT    IN    AUSTRIA 

tablishment  of  new  sickness  insurance  societies  and  to  create  larger 
and  more  efficient  organizations  embracing  several  districts. 

The  reform  scheme  further  proposes  to  abolish  the  present 
system  of  minimum  benefits  and  replace  it  by  definite  benefits, 
fixed  by  law,  which  shall  be  the  same  for  all  societies  and  all  trades. 
It  creates  a  single  standard  for  the  calculation  of  premiums  and 
benefits  by  establishing  a  system  of  six  salary  classes  for  the  dif- 
ferent types  of  insurance.  These  have  already  been  given  in  the 
section  on  Invalidity  and  Old  Age  Insurance  of  employes  in  offices 
(Privat  Beamten)  and  need  not  be  repeated  here.*  As  a  conse- 
quence, sick  benefits  will  be  determined  easily  and  accurately  on 
the  basis  of  the  earnings  of  the  insured. 

In  view  of  the  proposed  extension  to  include  invalidity 
and  old  age  insurance,  the  idea  of  increasing  the  benefits  for 
sickness  insurance  has  been  abandoned.  It  may  be  possible, 
however,  under  the  new  system  to  increase  the  obligatory 
benefits,  especially  those  granted  to  families  of  members  and 
for  the  care  of  convalescents.  But  these  additional  benefits  can 
be  given  only  if,  as  in  Germany,  a  special  reserve  fund  is  created 
from  the  additional  contributions  of  the  members  themselves. 
The  period  of  payment  of  sick  benefits  is  extended  to  one  year. 

The  reform  scheme  attempts  also  to  regulate  the  relations 
between  sickness  insurance  societies  and  physicians,  druggists,  and 
hospitals.  It  permits  the  societies  either  to  engage  physi- 
cians themselves  or  to  allow  members  free  choice.  Societies  will 
pay  the  hospitals  according  to  a  fixed  tariff,  but  will  have  to  turn 
over  to  them  all  benefits  which  they  would  otherwise  have  paid 
the  beneficiary  during  the  entire  period  of  treatment. 

No  attempt  at  very  radical  changes  in  the  financial  conditions 
of  the  societies  is  made,  the  most  important  one  being  in  the 
calculation  of  premiums,  due  to  the  division  of  members  into  the 
six  salary  classes  referred  to  above.  Contributions  will  be  graded, 
according  to  certain  factors,  such  as  occupation  and  sex,  which 
influence  the  amount  of  sickness;  and  in  the  future  these  contri- 
butions will  be  equally  divided  between  employers  and  employes; 
instead  of  as  at  present,  one-third  and  two-thirds  respectively. 

The  reform  aims  particularly  to  make  accident  insurance 
*See  page  362. 
415 


THE    REFORM    PROJECT  IN    AUSTRIA 

effective  in  those  industries  attended  with  the  greatest  risks.  Thus, 
miners,  who  have  heretofore  received  but  meagre  protection  under 
a  special  law,  are  now  to  be  placed  in  the  same  category  as  other 
workingmen.  Agricultural  workmen,  on  the  other  hand,  even 
when  steam  or  other  motive  power  is  used,  are  to  be  excluded 
from  obligatory  insurance.  In  this,  the  reform  satisfies  most  of 
the  parties  concerned,  since  agricultural  establishments  with  such 
power  have  exhibited  relatively  large  accident  risks  and  only  a 
relatively  small  number  of  workmen  continuously  employed.  In 
addition,  the  privilege  of  voluntary  insurance  against  accident, 
which  the  revision  of  1894  made  possible,  is  to  be  repealed,  as  it  has 
not  led  to  a  wide-spread  extension  of  the  system. 

The  territorial  plan  of  organization  has  been  preserved. 
Although  these  institutions  are  thus  far  only  moderately 
efficient,  they  are  regarded,  on  the  whole,  as  capable  of  attaining 
the  end  for  which  they  were  established.  It  is  their  plan  of  organ- 
ization which  is  least  approved.  Want  of  a  sufficient  number  of 
local  offices  has  led  to  considerable  inconvenience,  especially  in 
connection  with  the  collection  of  contributions.  To  overcome  this, 
it  is  now  proposed  to  let  sickness  insurance  societies  serve  as 
collecting  centres.  The  most  serious  difficulty,  however,  is  the 
lack  of  a  final  court  of  last  resort  for  all  litigants,  the  various 
territorial  courts  of  arbitration  having  interpreted  the  law  differ- 
ently, even  as  to  fundamental  principles.  This  is  not  remedied. 

Because  of  the  short  period  of  four  weeks,  at  which  time 
benefits  under  the  present  accident  insurance  law  become  payable, 
benefits  of  sickness  insurance  societies  overlap  those  of  the  accident 
insurance  institutions.  This  has  aroused  much  dissatisfaction.  The 
reform  plan  fixes  a  new  waiting  period,  in  making  which  the  author- 
ities considered  two  antagonistic  demands.  Workingmen  desired 
the  total  suppression  of  the  waiting  period;  employers,  on  the 
contrary,  demanded  its  extension  so  that  their  accident  insurance 
institutions  might  be  relieved  of  the  expense  and  trouble,  as  well 
as  the  cost  of  paying  indemnities  for  disablements  of  short  dur- 
ation. This,  they  contended,  would  make  them  better  able 
to  meet  the  pensions  of  longer  duration.  The  reform  is  in  agree- 
ment with  the  employers'  views,  and  makes  the  waiting  period 
one  year  during  which  time  medical  attendance  and  sick  benefits 

416 


THE    REFORM    PROJECT    IN    AUSTRIA 

are  to  be  supplied  by  the  sickness  insurance  societies.  Work- 
ingmen  under  this  plan  will  thus  carry  a  considerably  larger  share 
of  the  cost  of  accident  insurance.  The  employers'  contribution  to 
the  sickness  insurance  societies  will  be  one-half  instead  of  one- 
third  of  the  entire  cost  as  formerly.  Previous  experience  in  Aus- 
tria and  Germany  indicates  that  this  increase  of  contribution 
should  about  equal  the  amount  which  the  employers  save  under 
the  new  plan. 

While  in  general  the  reform  program  does  not  aim  to  increase 
benefits,  these  are  nevertheless  augmented  in  some  cases.  Persons 
who  are  paid  little  or  no  wages,  such  as  apprentices,  for  example, 
will  receive  benefits  on  a  minimum  basis.  In  case  of  total  inva- 
lidity and  complete  destitution  it  is  proposed  to  increase  the  pen- 
sion one-half.  Full  pensions  are  to  be  awarded,  also,  to  conva- 
lescents not  completely  incapacitated,  if  necessary  to  aid  them 
to  recover  their  health.  Surviving  brothers  and  sisters  and  grand- 
children also  may,  under  certain  conditions,  be  entitled  to  pen- 
sions. 

The  change  from  the  present  system  to  that  of  the  six  wage 
classes  will  lead  to  some  alterations  in  the  amount  of  pensions, 
but  will  not,  on  the  whole,  affect  the  general  average.  Another 
change  consists  in  the  establishment  of  four  degrees  of  pensions  in 
cases  of  partial  invalidity  resulting  from  accidents.  These  are 
i,  f ,  f ,  and  f  of  the  full  sum  respectively.  As  desired  by  accident 
institutions,  the  project  admits  in  principle  the  payment  of  lump 
sums  instead  of  small  pensions,  when  the  pensions  would  be  less 
than  one-fifth  the  wages  of  the  insured.  The  plan  also  contem- 
plates a  modification  of  great  practical  importance  by  which 
pensions  for  partial  invalidity  will  hereafter  be  valued  accord- 
ing to  the  degree  of  injury  suffered  and  not  as  heretofore  on  the 
basis  of  the  impairment  of  the  wages  of  the  injured  workman.  The 
program  further  permits  insurance  institutions  to  undertake  the 
care  of  the  injured  during  each  phase  of  his  medical  treatment. 
On  the  other  hand,  it  has  not  extended  the  operations  of  these  in- 
stitutions to  the  field  of  prevention  of  accidents.  This  is  due  to 
the  fact  that  the  territorial  accident  insurance  institutions  do 
not  seem  able  to  undertake  this  task  as  well  as  the  German 
trade  associations  composed  of  employers  of  homogeneous  classes. 
27  F  4'7 


THE    REFORM   PROJECT  IN    AUSTRIA 

Austrian  legislators  have  always  regarded  the  prevention  of  acci- 
dents as  work  for  the  police  and  the  government  authorities,  aided 
by  the  factory  inspectors.  The  Minister  of  the  Interior,  in  a  de- 
cree issued  on  May  13,  1900,  appointed  a  technical  commission 
for  the  prevention  of  accidents  which  has  the  administration  of 
this  important  subject  in  charge. 

The  system  of  capitalized  values  with  fixed  premiums  which 
has  been  the  basis  of  Austrian  accident  insurance  from  the  be- 
ginning, is  preserved  intact  in  spite  of  considerable  opposition,  the 
authorities  strongly  preferring  it  to  the  German  plan.* 

The  one  new  section  in  the  program  of  reform  is  that  of 
insurance  against  invalidity  and  old  age  for  workingmen  in  gen- 
eral. Because  of  the  absence  of  this  branch  of  insurance  in  the 
present  system,  this  part  of  the  plan  meets  with  the  approval  of  all 
concerned.  The  measure  is  modelled  upon  the  German  law,  and 
includes  insurance  for  widows  and  orphans.  It  is,  however,  chiefly 
an  invalidity  insurance  law,  the  pension  for  old  age  being  nothing 
more  than  an  invalidity  pension  with  the  requirement  of  proof  of 
invalidity  removed  after  the  insured  has  reached  the  age  of  sixty- 
five.  Invalidity  is  defined  in  the  broadest  terms.  It  is  that  con- 
dition in  which  the  person  insured  is,  through  old  age,  sick- 
ness or  other  disablement  no  longer  capable  of  earning  an 
amount  equal  to  one-third  the  average  wage  of  his  trade  and  class. 
There  is  a  period  of  required  contributions  after  the  expiration 
of  which  pensions  are  paid.  For  invalidity,  this  amounts  to 
200  weeks  of  contributions;  for  old  age,  1200  weeks;  and  for  insur- 
ance of  widows  and  orphans,  at  least  40  weeks.  Special  provisions 
are  made  for  those  who  at  the  time  the  law  becomes  effective  shall 
have  passed  their  thirty-fifth  year.  The  waiting  period  passed, 
the  pension  is  payable  from  the  first  day  of  invalidity  or  with  the 
first  day  following  the  sixty-fifth  anniversary  of  the  birth  of  the 
insured.  The  amount  depends  on  the  wage  class  to  which  the  con- 
tributor belongs  and  also  on  the  length  of  time  his  insurance  has 
been  maintained  in  force.  The  invalidity  pension  is  composed  of 
a  basic  sum  fixed  at  120,  150,  180,  210,240,  or  270  kronen  ($24, 
$30,  $36,  $42.  $48,  and  $54)  a  year  according  to  wage  class.  A 
graduated  increase,  equal  to  one-fifth  of  the  amount  of  contribu- 
*  For  discussion  of  this  subject  see  page  31. 
418 


THE    REFORM    PROJECT   IN   AUSTRIA 

tions  paid  during  the  period  of  insurance,  is  added.  The  two  sums 
together  make  up  the  total  pension.  The  benefits  of  the  proposed 
invalidity  insurance  law  are  not  limited,  however,  to  pensions  only. 
The  insurance  institution  may  give  medical  treatment  if  threatened 
invalidity  may,  in  that  way,  be  prevented  or  invalidity  which  has 
already  supervened,  be  cured.  In  place  of  the  whole  or  a  part 
of  the  pension,  the  insured  may  be  granted  free  treatment  in  a 
hospital. 

The  section  of  the  measure  which  has  found  least  favor  is  that 
concerned  with  the  insurance  of  widows  and  orphans.  Pensions  to 
them  are  to  consist  of  an  amount  varying  from  one-half  to  three 
times  the  basic  sum  of  the  pension  for  invalids.  According  to 
this  program,  the  state  will  make  a  donation  equal  to  90  kronen 
($18)  a  year  to  be  added  to  each  old  age  pension  and  will  pay  the 
necessary  premiums  during  the  periods  of  military  service  of  the 
insured.  In  addition,  it  will  support  the  courts  of  arbitration 
common  to  all  the  branches  of  insurance.  The  cost  of  ad- 
ministration of  the  state  insurance  department  will  reach  about 
2,000,000  kronen  ($400,000)  a  year. 

Contributions  of  the  interested  parties  will  thus  be  but  a  por- 
tion of  the  total  cost  of  insurance.  These  contributions  will  be 
determined  according  to  a  system  of  average  premiums  to  be  fixed 
by  law  for  12  years.  In  the  six  wage  classes  the  amounts  will  be 
respectively  10,  20,  30,  40,  50  and  60  heller  (2,  4,  6,  8,  10,  and 
12  cents)  a  week  per  person.  For  those  subject  to  obligatory 
insurance,  the  employer  and  the  insured  will  each  pay  half  the 
cost.  Those,  on  the  other  hand,  who  insure  voluntarily,  must 
pay  the  entire  contribution  themselves. 

The  following  figures  represent  the  aggregate  cost  which  it  is 
estimated  will  be  entailed  on  employers  and  employes  in  the  three 
branches  of  insurance. 

TABLE    145. — ESTIMATED   COST    OF    INSURANCE  TO  EMPLOYERS   AND 
EMPLOYES    IN    THE    AUSTRIAN    REFORM    PROJECT 

I.    Accident  Insurance  Kronen 

Employers 22,000,000 

Employes 22,000,000 

Total 44,000,000     ($8,800,000) 

419 


THE   REFORM    PROJECT  IN    AUSTRIA 

II.  Sickness  Insurance 

t  Kronen 

Employers 30,800,000 

Employes 30,800,000 

Total 61,600,000  ($12,320,000) 

III.  Invalidity  Insurance 

Employers 28,400,000 

Employes 28,400,000 

Total -    .  56,800,000  (111,360,000) 

IV.  Total  for  the  three  branches  of  insurance 

Employers 81,200,000 

Employes 59,200,000 

Total 140,400,000   ($28,000,000) 


42O 


APPENDICES 


APPENDIX 
SUMMARY  OF  WORKWOMEN'S 

A.  ACCIDENT 


Country 

Form  of  Insurance 
and  Date*  of  Statutes 

Persons  Insurable 

Character  of  Insur- 
ance Organisation 
and  Numbers  Insured 

I 
Great  Britain 

Statistics 
(1908) 

Voluntary  insurance 
Laws  of  6,  8,  1897;  30,  7, 
i  ooo;  21,  12,  1906,  and 
28,  8,  1907 

Workmen   and   domestics  (unrestricted) 
Employes  and  officials  in  industry  and 
agriculture    (with  yearly  wages  up  to 
$1250) 

Population  42,500,000;   13,000,000  wage- 
earners 

At  choice  of  employers  in 
state,  mutual  or   private 
stock  companies 

Also    by    agreement    in 
establishment  funds 

II 

Norway 

Statistics 
(1908) 

Compulsory  insurance 
Laws  of  23,  7,  1894,  and 
12   6,  1906 

Workmen    and   employes    in    industry 
(with  yearly  wages  up  to  $324) 

Population    2,300,000;     400,000     wage- 
earners 

State  institution  only 

III 

Sweden 

Statistics 
(1907) 

Voluntary  insurance 
Law  of  5,  7,  190  1 

Workmen  and  foremen  in  industry 

Population  5,400,000;    i  ooo  ooo  wage- 
earners 

As  in  Great  Britain 
About  350,000  insured 

IV 

Denmark 

Voluntary  insurance 
Laws  of  7,  i,  1898,  and 
15,5,1903 
Laws  of  3,  4,  1900,  and 
30,  3   1906 
Compulsory  insurance 
Law  of  i,  4,  1905 
Law  of  27,  5,  1908 

Workmen  and  employes  in  industry  (with 
yearly  wages  up  to  $648) 

The  fishing  industry  and  small  craft 

Seamen  and  boat  officials  (yearly  wages 
up  to  $648) 
Workmen  and  employes   in   agriculture 
with  wages  up  to  $408.     (Voluntary  in- 
surance for  those  in  small  establishments) 

As  in  Great  Britain,  except 
no  state  institution 

State  institution 

In  state,  mutual  or  private 
stock  companies 

V 

Holland 

Statistics 
(1006) 

Compulsory  insurance 
Law  of  2,  i,  1901 

Workmen  and  employes  in  industry 

Population,    5,700,000;    1,000,000  wage- 
earners 

State    institution    (mutual 
and  private  organizations 
also  permitted) 

82,129    insured    establish- 
ments 

*  In  the  dates,  the  first  numeral  represents  the  day,  the  second  the  month;  begin 
422 


INSURANCE  IN  EUROPE 

INSURANCE 


Contributions 
(  Yearly) 

Benefits 

Settlement  of 
Disputes 

Country 

By  employers  alone 
Employers  and  employes 

(a)   Accident  pensions  (up  to  50%  of  wages) 
in  weekly  payments  or  in  lump  sum. 
(b)  To  survivors,  up  to  3  times  the  yearly 
wages;  if  no  dependents,  only  funeral 
expenses  up  to  $50 

No  compensation  in  case  of  intentional 
injury 

(a)  By  committee  of  em- 
ployers and  workmen 
(b)  By  arbitrator  selected 
by  both  parties 
(c)  By    judge    of    county 
court  if  parties  cannot 
agree 

I 
Great 
Britain 

By  employers  alone 

(a)  Free  medical  treatment  and  pension 
(up  to  60%  of  yearly  wages)  or  free 
hospital  treatment  and  relief  to  family 
(up  to  50%    of  yearly  wages)  from 
the  sth  week  after  the  accident 
(b)  Funeral  expenses  (up  to  $13.50)  and 
pension   to   survivors  up  to  50%  of 
wages 
No  compensation  in  case  of  intentional 
injury 

Free,  by  special  insurance 
commission 

II 

Norway 

As  in  Norway 

(a)  Sick  pay  $  .2  7  per  day  from  the  6istday 
(b)  Invalidity  pension  up  to  $81  yearly 
(c)  Funeral  expenses  $16.20  and  pension 
to  survivors  up  to  $8  1  per  annum 
No  compensation  in  case  of  intentional 
injury;  gross  misconduct,  or  minor  in- 
juries 

By  arbitration  or  in  ordi- 
nary  court.     Appeal   to 
state    dept.   as  regards 
degree  of  impairment 

III 
Sweden 

As  in  Norway 

$1.35     per    insured    with 
equal  state  subsidy 
By   employers   with    state 
subsidy 

(a)  Sick  pay  (up  to  60%  of  yearly  wages) 
from  1  4th  week 
(b)  For  invalids:    a  lump  sum  up  to  6 
times  the  yearly  earnings 
(c)  For  survivors:    lump  sum  up  to  4 
times  yearly  earnings  and  $13.50  for 
funeral  expenses 
No  compensation  in  case  of  intentional 
injury  or  gross  negligence 

Workmen's   Insurance 
Council 

IV 

Denmark 

As  in  Norway 

$1,225.000    paid    in    pre- 
miums 

(a)  Free  medical  treatment  and  sick  pay 
up  to  70%  of  yearly  wages 
(b)  Invalidity   pension   up    to    70%    of 
yearly  wages  from  the  7th  week  after 
the  injury 
(c)  Survivor's  pension    up    to    60%    of 
yearly  wages  and  funeral  expenses  up 
to  30  times  daily  wages 
$1,075,000  for  60,022   injured   and  268 
killed 

Local  arbitration  councils 
of  employers  and  work- 
men and  central  arbitra- 
tion council 

V 
Holland 

ning  with  January  as  number  one;  "6,  8,  1897"  means  "6th  day  of  August,  1897." 

423 


APPENDIX    I 


Country 

For  m  of  Insurance 
and  Date  of  Statutes 

Persons  Insurable 

Character  of  Insur- 
ance Organisation 
and  Numbers  Insured 

VI 

Belgium 

Voluntary  insurance 
Law  of  24,  12,  1003 

Workmen  and  employes  in  industry, 
agriculture  and  commerce  (with  yearly 
wages  up  to  $480) 

As  in  Great  Britain  and  in 

guarantee  funds 

Statistics 

Compulsory  insurance 
Law  of  1868 

Miners 
Population    7,300,000;    2,100,000  wage- 

130,000  in  mutual  sickness 
societies 

(1906) 

earners 

VII 

France 

Voluntary  insurance 
Laws  of  9,  4,  1898;  30  6 
1809;  22,3,  1902;  31, 
3,  1905;    12     4,    1906; 
18,  7,  1907 

Workmen  and  employes  in  industry, 
agriculture  and  commerce 

As  in  Great  Britain 

Statistics 
(1906) 

Compulsory  insurance 
Laws  of  21,  4,  1898;  29, 
"•  1905 

Seamen 

Population  39,000,000;  9,500,000  wage- 
earners 

State  institution 

About     70    per     cent    of 
workers   insured 

V11I 

Switzerland 

Compulsory  insurance  bill 
now      before      Federal 
Council 
No  insurance  law  in  opera- 
tion 

Workmen  in  all  industries  and  transporta- 
tion 

State     insurance     depart- 
ment 

Statistics 
(estimated) 

Population  3,400,000 

600,000  insured  workers 

IX 

Italy 

Compulsory  insurance 
Laws  of  17,  3,  1808;  31, 
i    1904 

Workmen  and  employes  in  industry  and 
agriculture  using  machinery  (with 
yearly  wages  up  to  $420) 

As  in  Great  Britain 

Statistics 
(1906) 

Population  33,000,000;  10,000,000  wage- 
earners 

1,800,000  insured  workmen 

X 

Germany 

Compulsory  insurance 
Laws  of  1884-1887  and 
30,  6,  1900 

Workmen  irrespective  of  wages  and  in- 
ferior managing  officials  with  yearly 
wages  up  to  $750  in  industry  and  manu- 
facture. Also  by  special  rule  —  employes 
with  wages  over  $750  and  small  em- 
ployers 

Mutual  trade  associations 
and  state  executive  boards 
for  state  employes 

Statistics 
(1907) 

Voluntary  insurance 
(by  same  laws) 

Employers  and  persons  not  under  com- 
pulsion 

Population  62,100,000;  15,400,000  wage- 
earners 

114  trade  associations  and 
535  executive  boards; 
5,383,519      establishments 
and  21,172,027  insured 

XI 

Austria 

Compulsory  insurance 
Laws  of  28,  12,  1887,  and 
20,  7,  1894 

Workmen  and  employes  with  yearly 
wages  up  to  $480  in  industry  and  in 
agriculture  when  using  mechanical 
power 

Territorial    insurance    or- 
ganizations    and     trade 
association    for    railway 
workers 

Statistics 
(1906) 

Voluntary  insurance 
(by  same  laws) 

Employers  and  persons  not  under  com- 
pulsion with  wages  up  to  $480 

Population  27,300,000;  10,000,000  wage- 
earners 

7  territorial  insurance  or- 
ganizations and  i  railway 
trade  association,  425,076 
establishments        and 
2,918,679  insured 

424 


A.  ACCIDENT  INSURANCE — (Continued) 


Contributions 
(  Yearly} 

Benefits 

Settlements  of 
Disputes 

Countr^ 

As  in  Norway 

(a)  Sick  pay  up  to  50%  of  yearly  wages 

Justice   of   the   Peace   or 

VI 

(b)  Invalidity    pension    up   to    50%    of 

arbitration  court  in  cases 

Belgium 

yearly  wages 

involving  more  than  $60 

(c)  Survivor's    pension    up    to    30%  of 

By  employers  and  workmen 

yearly  wages 

with    subventions     from 

(d)  Medical  treatment  and   funeral  ex- 

state and  province 

penses 

As  in  Norway 

(a)  Sick  pay  up  to  50%  of  yearly  wages 
(b)  Invalidity   pension    up  to  66§%    of 

Justice  of  the  Peace  for 
(a)  and  (d);     otherwise 

VII 

France 

yearly  wages 

civil  court 

(c)  Survivor's  pension    up    to    60%    of 

yearly  wages 

(d)  Medical  or  funeral  expenses  up  to  $20 

Employers  and  workmen 

Sick  pay  for  injured  seamen  and  pensions 

Commission 

for  invalids  and  survivors 

Total  premiums=  1.85%  of 

total  wages  of  insured 

i.  State,  i%  of   wages  of 

(a)  Free  medical  treatment  from  day  of 

VIII 

insured;     employers     J, 

accident  and  sick  pay  up  to  80%  of 

Switzerlan 

and  workmen  i   of    the 

yearly  wages 

remainder 

(b)  Invalidity    pension    up    to    70%    of 

yearly  wages 

(c)  Survivor's    pension  up    to    60%   of 

Total  premiums  est.  3.16% 

yearly  wages  and  cost  of  burial 

of  total  wages  of  insured 

As  in  Norway 

(a)  Sick  pay  up  to  50%  of  yearly  wages 

Local  Industrial   Council 

IX 

(b)  For  invalids:    a  lump  sum  up  to  6 

in  cases  involving  sums 

Italy 

times  the  yearly  wages  or  an  annuity 

up   to   $40;      otherwise 

(c)  Survivor's  pension  up  to  5  times  yearly 

local  courts 

$3.20  per  insured  workman 

'  wages 

(d)  Primary  medical  treatment 

As  in  Norway 

(a)  Free  medical  treatment  and  pension 

Free     arbitration      court 

X 

upto66§%  of  yearly  wages;  or  free 

and  Imperial  Insurance 

Germany 

hospital     treatment    with    relief    to 

Office  with  equal  repre- 

family up  to  60%    of   wages  —  from 

sentation    of    employers 

the  1  4th  week  after  accident 

and  workmen 

(b)  Burial  expenses  up  to  20  times  daily 

wages  and  pension  to  survivors  up  to 

60%  of  wages 

Premiums  =  $42,890,350; 

Total    compensations  =  $37,772,648    to 

$2.03      per      workman, 
$7.06  per  establishment 

980,044   persons;    $38.44    per    injured 
workman 

Employers,oo%  )    of  total 
Workmen,  10%  /premiums 

(a)  Only  accident  pensions  up  to  60%  of 
yearly  wages  from  the  5th  week  after 

Free     arbitration     court 
only 

XI 

Austria 

accident 

(b)  Burial  expenses  up  to  $10  and  pension 
to  survivors  up  to  50%  of  wages 

Premiums=to  $7,542,043; 

Total     compensations  =  $4,874,995     to 

$2.58     per      workman, 

89)354  persons 

$17.75  per  establishment 

425 


APPENDIX    I 


B.    SICKNESS 


Country 

Form  of  Insurance 
and  Date  of  Statutes 

Persons  Insurable 

Character  of  Insur- 
ance Organisation 

I 
Great  Britain 

Statistics 
(i9°s) 

Voluntary  insurance 
Laws  of  1875  and  7,  S, 
1896 

Workmen  in  all  industries 

Population  42,500,000;  13,000,000  wage- 
earners 

Registeredand  unregistered 
friendly     societies     with 
and  without  privileges 
26,917    friendly    societies; 
5,000,000  members,  about 
half  of  whom  are  work- 
men 

II 

Norway 

Statistics 
(1907) 

Compulsory  insurance 
Law  of  18,  9,  1909 

Voluntary  insurance 

Workmen  and  employes  in  industry  and 
agriculture 

For  those  not  included  in  compulsory  law 

Population    2,300,000;     400,000    wage- 
earners 

Communal    societies  with 
Central  State  Dept. 

Private  societies 

400  societies;  60,000  mem- 
bers 

III 

Sweden 

Statistics 
(1903) 

Voluntary  insurance 
Law  of  30,  10,  1891 

As  in  Great  Britain 

Population  5,400,000;     1,000,000  wage- 
earners 

As  in  Great  Britain 

1887    registered    societies; 
360,173  members 

IV 

Denmark 

Statistics 
(1907) 

Voluntary  insurance 
Law  of  12,  4,  1892 

As  in  Great  Britain 

Population,    2,600,000;     400,000    wage- 
earners 

As  in  Great  Britain 

1452    registered    societies; 
553,000  members 

V 
Holland 
Statistics 
(1890) 

Voluntary  insurance 
No  law 

As  in  Great  Biitain 

Population  5,700,000;    1,000,000  wage- 
earners 

Free  sickness  societies 

650     societies;        600,000 
members 

VI 

Belgium 

Statistics 
(1907) 

Voluntary  insurance 
Laws  of  3,  4,  1851  and 
23,  6,  1894 

As  in  Great  Britain 

Population   7,300,000;    2,100,000  wage- 
earners 

As  in  Great  Britain 

3,330    societies;     400,000 
members 

VII 

France 

Statistics 
(1907) 

Voluntary  insurance 
Laws  of  15,  7,  1850  and 
I    4,  1898 

Compulsory  insurance 
Law  of  29,  6,  94 

As  in  Great  Britain 

Population  39,000,000;   10,000,000  wage- 
earners 
Miners 

As  in  Great  Britain 

19,500  societies;  4,680,000 
members 
(In    1906)    199    societies; 
205,000  members 

VIII 

Switzerland 

Statistics 
(1903) 

Voluntary  insurance 
No  general  law 
Voluntary     general      law 
now    before    Federal 
Council 

As  in  Great  Britain 
Population  3,400,000 

Free  sickness  societies 

2006    societies;        505,947 
members 

IX 

Italy 
Statistics 
(1905) 

Voluntary  insurance 
Law  of  15,  4,  1886 

Workmen  in  all  industries 

Population  33,000,000;  10,000,000  wage- 
earners 

As  in  Great  Britain 

6,535  societies;     1,000,000 
members 

X 

Germany 

Statistics 
(1907) 

Compulsory  insurance 
Laws  of  15,  6,  1883;    10, 
4,  1892;  5,  5,  1886;  30, 
0,  1900;   25,  5,  1903 

Voluntary  insurance 
(by  same  laws) 

Workmen  and  employes  in  industry  and 
commerce  (with  yearly  earnings  up  to 
$500),  and  by  special  ruling  to  workers 
in  agriculture  and  home  industries 

Persons  not  obliged  to  insure  with  yearly 
earnings  up  to  $500 

Population  62,100,000;   15,400,000  wage- 
earners 

Mutual   sickness   societies 
established    by   law   and 
private  friendly  societies 

23,232  societies;  12,480,502 
members     (inclusive     of 
758,706  miners) 

XI 

Austria 

Statistics 
(1906) 

Compulsory  insurance 
Law  of  30,  3,  1888 

Voluntary  insurance 
(by  same  law) 

Workmen  and  employes  engaged  in  in- 
dustry. 

Workmen   in  agriculture  and   home  in- 
dustries 
Population  27,300,000;   10,000,000  wage- 
earners 

As  in  Germany 

2917  societies;     2.946,668 
members 

426 


INSURANCE 


Contributions 
(  Yearly) 

Benefits 

Settlement  of 
Disputes 

Country 

By    members,    with    state 
aid 

Only  sick  pay  and  funeral  expenses;  gen- 
erally no  free  medical  or  hospital  treat- 
ment 

I 

Great 
Britain 

Workmen  ft,  state  -fa,  em- 
ployers Js,  commune  ^ 

$2.45  per  member 

As  in  Great  Britain   but  generally  medi- 
cal treatment  also 

$2.54  per  year  per  member;    $  .40  per 
sick  day 

II 

Norway 

By    members,   with    state 
ubsidy 

$2.32  per  member 

As  in  Great  Britain 

$1.89  per  year  per  member;    $  .32  per 
sick  day 

III 

Sweden 

As  in  Sweden 
$1.93  per  member 

As  in  Great  Britain 

$2.54  per  year  per  member;   $  .55  per 
sick  day 

By  sick-club  inspector 

IV 
Denmark 

Differ    according    to    by- 
laws 

$1.44  per  member 

Medicines    medical  treatment  and  sick 
pay 

V 
Holland 

As  in  in  Sweden 
$2.25  per  member 

As  in  Great  Britain,  but  generally  medi- 
cal treatment  also  as  well  as  care  during 
invalidity  for  92,000  members 
$36.50  per  invalid;   $9.00  per    year  per 
sick  member;  $  .40  per  sick  day 

VI 

Belgium 

As  in  Sweden 

(In  1904)  $2.25  per  mem- 
ber 
State  subsidy  and  by  work- 
men J,  employers  $ 

As  in  Great  Britain  and  provision  for  old 
age  and  invalidity  for  1,500,000  mem- 
bers;  150,000  pensioners 
(In  1904)  $10.00  per  year  per  sick  mem- 
ber; $  .50  per  sick  day 
Medical     attendance,     medicines,     sick 
benefits,  and  funeral  expenses 

VII 

France 

Members    and     voluntary 
contributions     ot      em- 
ployers 

$3.64  per  member 

Vary  with  societies;    most  give  medical 
treatment,  sick  pay  and  funeral  benefits; 
63,000   receive   care    during  invalidity: 
and  old  age 
$4.50  per  year  per  member 

VIII 
Switzerland 

As  in  Sweden 
$1.80  per  member 

Vary  with  societies;   most  give  only  sick 
pay  and  funeral  expenses 

$1.00  per  year  per  member 

IX 

Italy 

Employers  41    of  (i$-6)  % 
Workmen  J  J      of  wages 

Without    contributions    of 
employers 

$4.29  by  insured  workman 
$1.90  by  employers  per 
insured  workman 

(a)  Medical  treatment  and  sick  pay  (50% 
of  average  daily  wages)  or  free  hospital 
treatment  and  one-half  sick  pay  for  the 
family  for  26  weeks 
(b)  Similar  benefits  for  confinements  for 
6  weeks 
(c)  Funeral  expenses,   20  times  average 
daily    wages.     Extension   of    above 
minimum  benefits  by  special  rules 
$r3-75  Per  year  per  sick  member;  $  .70 
per  sick  day 

Free,  by  supervising  mag- 
istrates 

X 

Germany 

As  in  Germany 

$4.20    per   member   (total 
premiums  of  employers 
and  workmen) 

As  in  Germany,  but  aid  for  only  20  weeks 
and  sick  pay  60%  of  the  average  daily 
wages 

$9.40    per   year  per  sick  member;  $  .41 
per  sick  day 

Free  by  court  of  arbitra- 
tion 

XI 

Austria 

427 


APPENDIX    I 


C.   OLD  AGE  AND 


Country 

Form  of  Insurance 
and  date  of  Statutes 

Persons  /nsurable 

Character  of  Insur- 
ance Organisation 

I 
Great  Britain 

Voluntary  insurance 
Laws  of  1882  and  7,8,1806 

All  persons 

State    institution,   friendly 
societies      and      private 
companies 

Old     ige     pension     law, 
i,  8,  1008 

Needy  persons  over  70.     In  1908,  esti- 
mated 572,000  pensioners 

State  institution 

11 

Norway 

No  insurance  law 
Compulsory         insurance 
planned 

All  workingmen  and  women  irrespective 
of  income 

State  institution 

III 

Sweden 

No  insurance  law 
Compulsory          insurance 
planned 

As  in  Norway 

As  in  Norway 

IV 

Denmark 

Statistics: 
(1906) 

No  insurance  law 
Invalidity    insurance     law 
planned 
Old    age    pension      laws, 
9,  4,  1891;    23,  5,    1902: 
13.  3,  I9°8 

Needy  persons  over  60 

Population     2,600,000;     400,000     wage- 
earners 

State  institution 
50,000  pensioners 

V 
Holland 

No  insurance  law 
Compulsory  old  age  insur- 
ance law  planned 

All  workingmen  and  women  with  yearly 
wages  up  to  $400 

State  institution 

VI 

Belgium 

Voluntary  insurance 
Laws  of  8,  5,  1850;    16, 
3,  1865;    10,   5.   1900; 
20,  8,  1903 
Compulsorv  insurance: 
Law  of  28,  3,  1868 

All  persons 
Miners 

State  institution 
In  1906,8277  pensions 

Friendly  societies 

VII 
France 

Voluntary  insurance 
Laws  of  18,  6,  1850  and 
20,  7,  1886 

Compulsory  insurance 
Law  of  ii,  4,  1881: 

Law  of  29,  6,  1894: 

Non-contributory  old  age 
and  invalidity  provisions 
Laws  of  14,  7,  1905;  31, 
12,  1007 
Contributory    compulsory 
insurance  law  passed  6 
4,  1910 

All  persons 

Seamen 
Miners  (with  yearly  wages  up  to  $480) 

All  indigent  citizens  over  70  and   others 
totally  invalidated  by  disease  or  acci- 
dent at  any  age 

All  workmen  and  employes 

State  institution  and    pri- 
vate friendly  societies 
In  1006,  300,647  pension- 
ers;   1,300,000  insured 

State  institution 
Miners'  pension   unds 
State  institution 

State        institution       and 
friendly  societies 

VIII 

Switzerland 

Voluntary  insurance 
No    state,  only  cantonal 
provisions 

All  persons 

Private  friendly  societies 

IX 

Italy 

Voluntary  insurance 
Laws  of  17,  7,  1808;  28, 
7,  1001  and  30,  5,  1907 

All  wage  earners 

State  institution 

X 
Germany 

Statistics: 
(1007) 

Compulsory  insurance 
Laws  of  22,  6,  1889;   13, 
7,  1899 

All  wage  earners  and  employes  with  yearly 
wages  up  to  $500.     Also,  small  employ- 
ers  and   house   workers   by   order   of 
the  Bundesrat 

Population  62,100,000;   15,400,000  wage- 
earners 

Territorial    insurance    in- 
stitutions 

41    institutions    and 
14,958,118  insured 

XI 

Austria 

Compulsory  insurance 
Law  of  ii,  12,  1906: 

Law  of  .28,  7,  1889: 

Compulsory  old  age  and 
invalidity  insurance  lav.' 

Office  employes 
Miners  (about  150,000) 

State  institution 
In  miners'  societies 

In  state  institution 


428 


INVALIDITY  INSURANCE 


Contributions 

Benefits 

Settlements  of 
Disputes 

Country 

Premiums  of  the  insured 
State  from  general  taxation 

Annuities  up  to  $487.50;  from  1865-1890, 
21.000  annuitants 

From  $  .25  to  $1.25  weekly 

Local  pension  committee 

I 

Great  Britain 

Premiums  of  insured  with 
subventions    from    state 
and  communes 

Pensions  from  age  70 

.... 

II 
Norway 

As  in  Norway 

As  in  Norway 

III 

Sweden 

State  and  communes  each 
half  the  cost 

Varies  with  need  of  pensioner;  average  $41 
per  pensioner 

IV 

Denmark 

Employers   and    workmen 
equally  and   subvention 
from  state 

Pensions  from  age  65  after  waiting  period 
of  1248  contributory  weeks. 

.... 

V 
Holland 

Premiums  of  insured  with 
state  subvention 

Employers,  workmen,  state 
and  province 

Pensions  beginning  from  ssth   to   6sth 
year;  average  $41 

Old  age  pension  after  30  to  35  years  of 
service 

Pension  commission 

VI 

Belgium 

Premiums  of   the  insured, 
with  state  subsidy  up  to 
i  of  the  pension 

Insured  and  state  subven- 
tion 
Employers  and  miners,  each 
half 
State  alone 

Insured,     employers     and 
state 

(a)  Old  age  pension  earliest  from  the  soth 
year  (maximum  $250);  average  $27 
(b)  invalidity  pension  for  earlier  infirmity 
(maximum  $250) 
(c)  Return  of  premiums  if  death  occurs 
before  pension  is  due 
Pensions  from  soth  year  (widows  and 
orphans  half) 
Pensions  from  55th  year 

Pensions 

Old  age  pensions  from  age  65  and  inva- 
lidity pensions  for  earlier  infirmity 

Pension  commission 

VII 

France 

Premiums  of  insured 

Old  age  pensions 

VIII 

Switzerland 

Premiums  of   the  insured 
with  state  subvention  up 
to   $2.50  for  each,   per 
annum 

I 

(a)  Invalidity  pension  after  5  contributory 
years  (at  least  $25) 
(b)  Old  age  pension  from  Soth  year  after 
25  contributory  years  (at  least  $25) 
(c)  Return  of  premiums  in  case  of  death 
before  receipt  of  pension 

IX 

Italy 

Equal    premiums    of    em- 
ployers    and    employed 
with    an     annual    state 
subsidy    ot    $12.50   per 
pension 

$1.50  by  workman;   $1.50 
by  employers  per  work- 
man;  $  .83  by  state  per 
workman;     $3.83    total 
annual  premium 

(a)  Invalidity  pension  after  200  contribu- 
tory weeks 
(b)  Old  age  pension  from  70  th  year  after 
1200  contributory  weeks 
(c)  Free    treatment  and  relief  to  family 
to  prevent  invalidity 
(d)  Return  of  premiums  in  case  of  death, 
accident  or  marriage  before  pension  is 
due 

Average  invalidity  pension  $41.50;     old 
age  pension  840;  sickness  pension  $62 

Free  by  Arbitration  Court 
and  Imperial  Insurance 
Office  with  equal  repre- 
sentation   of    employers 
and  employed 

X 

Germany 

Premiums,  of  insured  with 
contributions  of  employ- 
ers varying  with  salary 
class  of  insured  and  state 
subsidy. 

Equal  premiums  of  miners 
and  employers 

(a)  Invalidity  pension  after  120  contribu- 
tory months 
(b)  Old  age  pensions  after  480  contribu- 
tory months 
(c)  Pension  to  widow  of  one  half  pension 
husband  would  have  received 
(d)  Return  of  premiums  if  death  occurs 
during  waiting  period 
(a)  Invalidity  pension 
(b)  Widows  and  orphans  pensions,  maxi- 
mum, J  of  the  miner's  pension 

Arbitration  Courts 

XI 

Austria 

429 


APPENDIX  II 

CONTRIBUTIONS  AND   BENEFITS  OF  WORKINGMEN'S 
INSURANCE  IN  GERMANY,  1907 

I.  ACCIDENT    INSURANCE 
Contributions  Benefits 

Number  of  persons  insured  21,172,027          Number  of  persons  com  pen- 
Number  of  establishments  5,383,519              sated      ....            980,044 
Contributions  of  employ-  Total  benefits  (M arks)    .     151,090,592 

ers  (Marks)     "  .       .      171,561,400  Benefits  per  insured  work- 
Contributions  per  insured  man  (Marks)        ,       .                 7.13 

workman  (Marks)     .  8.10          Benefits  per  case  compen- 

Contributions  per  estab-  sated  (Marks)      .       .              '53-76 

lishment  (Marks)      .  31.86 

II.  SICKNESS    INSURANCE 

Number  of  persons  insured   12,138,966*  Total  benefits  (Marks)    .     273,887,506 

Contributions  of  employers  Benefits  per  insured  work- 

(Marks)      .       .       .       92,174,982  man  (Marks): 

Contributions  of  employes  Sick  benefit  .                               10.00 


(Marks)       .        .        .     208,204,204  Physicians 

Contributions  per  insured  Medicines 

workman:  Hospital  Care 

Employers  (Marks)  .  7.60  Other  benefits 


5.21 

248 

1.06 


Employes  (Marks)    .  17.15!  Total  (Marks)      .       .  22.56 

Total  (Marks)    .       .  24-75 

III.    OLD   AGE   AND   INVALIDITY    INSURANCE 

Number  of  persons  insured  14,958,118          Total  benefits  (Marks)    .      172,891,300 
Contributions  of:  Benefits  per  insured  work- 
Employers  (Marks)  .  89,321,600              man  (Marks)         .      .               11.56 
Employes  (Marks)    .  89,321,600          Average  value  of  pension: 
State  (Marks)    .       .  49,620,600              Invalidity  (Marks)      .              166.04 
Contributions  per  insured  Sickness  (Marks)        .              166.24 
workman:  Old  Age  (Marks) .       .              161.64 
Employers  (Marks)    .  5.97 
Employes  (Marks)     .  5.97 
State  (Marks)            .  3.32 
Total  (Marks)           .  15.26 

*  Average  membership  in  all  sickness  societies  for  1907;  membership  at 
close  of  year,  11,721.96. 

f  Includes  cost  of  insurance  for  members'  families  to  which  employers  do 
not  contribute. 

430 


COST  AND  BENEFITS  OF  WORKWOMEN  S  INSURANCE  IN  GERMANY 

IV.     AVERAGE    CONTRIBUTIONS    AND     BENEFITS     PER    COMPLETELY 
INSURED    WORKMAN 


CONTRIBUTIONS  PER  INSURED  WORKMAN 

BENE- 

(Marks) 

FITS  PER 

Kind  of  Insurance 

By  Em- 
ployers 

By   Em- 
ployes 

By  State 

Total 

INSURED 
WORK- 
MAN 

(Marks} 

Accident  insurance 

8.10 

8.10 

7-  '3 

Sickness  insurance   . 

7.60 

17.15 

24-75 

22.56 

Invalidity  and  old  age  insur- 

ance      

5-97 

5-97 

3-32 

15.26 

1  1.56 

Total      

21.67 

23.12 

3-32 

48.11 

41.25* 

*  As  the  average  total  contribution  of  the  employes  was  23.12  Marks,  the 
excess  of  benefits  over  their  contributions  was  18.13  Marks  per  insured  workman. 
The  contributions  of  employes  were  only  56  per  cent  of  the  benefits  received. 


43' 


APPENDIX  III 

ACCIDENT  INSURANCE  IN  SWITZERLAND 

The  following  valuable  data  on  accident  insurance  in  Switzer- 
land were  received  too  late  to  be  included  in  the  text.  We  desire 
to  acknowledge  our  indebtedness  to  Dr.  Gutknecht  of  the  Swiss 
Department  of  Industry  for  compiling  them. 

In  1907  there  were  fourteen  companies  carrying  on  accident 
insurance  in  Switzerland  under  state  supervision.  Of  these,  two 
were  mutual  and  twelve  were  stock  companies.  Five  were  Swiss, 
five  German,  three  French  .and  one  Italian.  In  addition,  nine 
mutual  societies  and  trade  associations  carried  on  this  business 
without  state  control.  428,000  persons  in  all  were  insured,  the 
premiums  aggregating  15,000,000  francs  (|3,ooo,ooo). 

In  the  years  from  1905  to  1907,  the  following  conditions 
prevailed  in  the  two  largest  companies.  These  contained  about 
250,000  workmen  in  the  most  varied  trades  and  their  figures 
therefore  correspond  very  closely  with  the  average  for  the  country. 

Average  yearly  wage  per  insured  workingman .       .  1 030  francs 

Average  total  premium 2.84  per  cent,  of  wages 

Management  expenses  and  commissions  .       .       .  14  per  cent,  of  the  total 

premium 
Per  10,000  insured  there  were: 

Fatalities 4.9 

Invalidities 57.8 

Temporary  incapacities      .       .       .               .  1,960.0 

Total 2,022.7 

Compensations  paid  per  100.000  francs  of  wages  (Francs): 

For  fatalities 145 

'    invalidities 905 

"    temporary  incapacities       ....     1,363 

Total 2,413 

Average  compensation  (Francs): 

For  each  fatality         .       .       .  3,022 


invalidity     . 
temporary  incapacitv 
injury 


Per  insured  workingman 


1,614 
72 
'23 

2} 


432 


APPENDIX  IV 

TABLE  OF  FOREIGN  MONEY  VALUES 

In  the  course  of  this  work  the  following  approximate  values 
in  American  money  were  employed  as  equivalent  to  the  standard 
coin  of  each  country  treated: 

Great  Britain      .        .        .        Pound  £  (20  shillings)      =     14.87 

Norway    | 

Sweden     \          ...        Crown  (100  Ore)  .27 

Denmark  J 

Holland  .        .        .        Guilder  .40 

Belgium        ) 

France          !•..•.        Franc  (100  centimes)  .20 

Switzerland  j 

Italy Lira  (100  centisimi)  .20 

Germany     ....        Mark  (100  pfennige)  .25 

Austria  Krone  (100  heller)  =          .20 


433 


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Guide  Book  of  the  Friendly  Societies  Registry  Office.     London,  1909. 
Moffrey,  Robert  W.     Rise  and  Progress  of  the  Manchester  Unity  of  the 

Independent  Order  of  Odd  Fellows,   1810-1904.     Manchester. 
Old  Age  Pensions.     Tables  prepared  in  connection  with  the  question  of 

Old  Age  Pensions,  with  a  preliminary  memorandum.     London, 

1907. 

Reports  of  the  Chief  Registrar  of  Friendly  Societies,  Part  A.  For  the 
year  ending  Dec.  31,  1907.  London,  1908. 

Ruegg,  Alfred  Henry,  K.G.  Employers'  Liability  and  Workmen's  Com- 
pensation. Seventh  Edition.  London,  1907. 

Statistics  of  Compensation  and  of  Proceedings  under  Workmen's  Com- 
pensation Act,  1906 — etc.  During  the  year  1908.  London, 
1909. 

Wilkinson,   J.    Frome,    M.A.      Social    Questions   of    the   Day.      Mutual 

Thrift.     London,  1891. 
Wilkinson,  J.  Frome,  M.A.     The  Friendly  Society  Movement.     London, 

1891. 

441 


BIBLIOGRAPHY 

ITALY 

Zacher,  G.  Die  Arbeiter-Versicherung  im  Auslande,  Vol.  5,  1909;  sec- 
tion on  Italy. 

NORWAY 

Beretning  fra  Den  Norke  Enkekasse,  Christiania,  1907.  Den  Norske 
Enkekasses  Dodelighedsunder  sogelser,  Bilag:  Grundtabellerne 
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Industria  statistik  1895-1905. 

Lov  om  Ulykkesforsikring  for  arbeidere  m.  v.  av  1894  med  tillaegslove. 

Lov  om  Ulykkesforsikring  for  fiskere  av  8  August,  1908. 

Lov  om  sygeforsikring  av  18  Sept.  1909. 

Riksforsikringsanstaltens  aarsberetninger  1895—1908. 

Social  statistik  (statistique  sociale  et  du  travail).  Bilag  til  den  parla- 
mentariske  Arbeiderkommissions.  Indstilling,  Christiania, '1898- 
1899. 

Ulykkesforsikringen,  1895-1899,  Norges  Officielle  Statistik  (Statistique  des 
assurances  contre  les  accidents  du  travail  1895-1899.  Christi- 
ania, 1906. 

Ulykkes-statistik  1895-1906. 

All  from  Riksforsikringsanstalten,  Christiania. 


SWEDEN 

Foreningen  Enighet  Ger  Styrka,  Ars  och  Revisions  berattelse  for  Ar  1907. 

Stockholm,    1908. 

Olycksfall  I  Arbete  (Arbets  statistik  C  :  i).     Stockholm,  1906. 
Riksforsakringsanstaltens  Underdanige  Berattelse  for  1906.     Stockholm, 

1907. 

SWITZERLAND 

Kranken-  und   Unfallversicherung.     Vorlage   des  Bundesrates  and  Be- 
schlusse  des  Nationalrates.      1908. 


442 


INDEX 


INDEX 


ACCIDENT  CASES:  proportions  of  de- 
grees of  impairment  in,  Denmark, 
(Table)  57 

ACCIDENT  INSURANCE  and  workmen's 
compensation,  3-144;  in  various 
countries,  42-132;  in  Austria,  115- 
132;  in  Belgium,  61-63;  in  Den- 
mark, 54-57;  in  France,  64-73;  in 
Germany,  89-1 15;  in  Great  Britain, 
42-48;  in  Holland,  57-61;  in  Italy, 
81-89;  m  Norway,  48-50;  in 
Sweden,  51-54;  in  Switzerland, 
73-81,  432;  summary  of,  in  Euro- 
pean countries,  Appendix  1/422-425 

ACCIDENTS:  causes  of,  for  which  com- 
pensation was  first  paid  in  indus- 
trial, building,  marine  and  trade 
associations  in  1907,  Germany, 
(Table)  106;  number  of,  and  rate 
per  1000  insured  in  industrial  mu- 
tual associations,  Germany,  (Table) 
104;  number  of,  in  agriculture  and 
forestry  and  ratio  per  1000  insured, 
Germany,  (Table)  106;  number  of , 
Holland,  (Table)  60;  in  various  in- 
dustries, France,  (Table)  70;  ratio 
of,  per  1000  full-time  workers  in  22 
classes  of  occupations,  Germany, 
(Table)  105;  total,  and  number 
per  10,000  full-time  workers,  Aus- 
tria, (Table)  123;  the  same,  by  ex- 
tent of  disability,  Austria,  (Table) 
124;  total,  and  rate  per  1000  in- 
sured, Germany,  (Table)  103.  See 
also,  Accident  insurance;  Work- 
accidents 

ADJUSTMENT:  expense  of,  under  work- 
men's compensation  laws,  21 

ADJUSTMENT  OF  CLAIMS:  in  Denmark, 
22,  23;  in  sickness  societies,  Ger- 
many, 254 

ADMINISTRATION:  of  invalidity  insur- 
ance, in  Austria,  363,  in  Germany, 
349-351;  of  old  age  insurance,  in 


ADMINISTRATION  (continued) 

Austria,  363,  in  Germany,  349~35i> 
in  Great  Britain,  318,  in  Italy,  344; 
of  sickness  insurance  societies,  in 
Germany,  158,  252,  254,  256,  262, 
in  Italy,  344;  of  unemployment  in- 
surance, in  Germany,  388,  in  Hol- 
land, 383 

ADMINISTRATION  COST:  in  detail,  under 
old  age  and  invalidity  insurance, 
Germany,  (Table)  359;  in  Holland, 
(Table)  60;  of  employers'  mutual 
associations,  in  Germany,  in;  of 
friendly  societies,  165;  of  insur- 
ance companies,  25,  in  Austria,  129, 
130,  in  Great  Britain,  46;  of  inva- 
lidity insurance,  in  Austria,  363, 
in  Germany,  358,  359;  of  National 
Accident  Insurance  Fund,  in  Italy, 
82;  of  old  age  insurance,  in  Aus- 
tria, 363,  in  Germany,  358,  359; 
of  sickness  insurance  societies,  in 
Denmark,  191,  in  France,  207,  in 
Germany,  251,  252,  253,  260,  262, 
in  Great  Britain,  180,  181,  in  Hol- 
land, 197,  in  Italy,  226,  in  Norway, 
185,  in  Sweden,  188,  in  Switzer- 
land, 220.  See  also  Management 
expense^ 

AFFILIATED.    See  Centralized 

AFFILIATED  OR  FEDERATED  SOCIETIES, 
66,  67;  advantages  and  disadvan- 
tages of,  148,  149;  in  Great  Brit- 
ain, 150,  in  Vienna,  143,  144 

AFFILIATED  ORDERS,  176-181 

AGRICULTURAL  LABORERS:  legislation 
affecting,  72;  not  generally  pro- 
tected, in  Austria,  122;  protection 
of,  in  Germany,  96,  98,  99 

AGRICULTURE  AND  FORESTRY  :  law 
covering,  in  Denmark,  56 

ALEGEMEEN  ZIEKENFONDS  VOOR  AM- 
STERDAM, Holland,  195,  196 


445 


INDEX 


ANCIENT  ORDER  OF  FORESTERS,  Great 
Britain,  150,  182 

AXMELDELIGE  SvGE-KASSE,  Norway, 
186, 187 

ANNUITIES:  capitalization  of,  in  Hol- 
land, 58;  capitalization  of,  not  re- 
quired in  Germany,  112;  granted 
at  different  ages  for  an  annual  pre- 
mium of  one  franc,  Caisse  Nation- 
ale  des  Retraites,  (Table)  328; 
number  and  amount  of  deposits 
and  amount  of,  in  state  annuity 
fund,  Belgium,  (Table)  322;  num- 
ber and  value  of,  since  1851  and  in 
force  December  31,  1906,  in  Caisse 
Nationale  des  Retraites,  (Table) 
330;  present  value  of,  under 
laws  of  1901,  Sweden,  (Table)  52; 
in  Canton  Waadt,  Switzerland, 
(Tables)  342;  secured  by  annual 
payment  of  1 2  francs  in  La  France 
Prevoyante,  (Table)  338.  See  also 
Invalidity  insurance;  Old  age  in- 
surance; Pensions 

ANNUITY  FUND:  number  insured  and 
value  of,  in  Italy,  (Table)  346 

ANSTALTEN,  Austria,  117 
APPRENTICES:  protection  of,  in  Austria, 

265 
"APPROVED"     SICKNESS     INSURANCE 

SOCIETIES:     in  France,  202,  203, 

204,  206,  207 

ARBEJDER  FORSIKRINGS  RAAD,  Den- 
mark, 55,  57 

ARBITRATION:  appeals  from  courts  of, 
in  sickness  insurance  societies, 
Austria,  (Table)  277;  disposition  of 
cases  by  courts  of,  Austria,  (Table) 
132;  in  Austria,  132,  267,  276,  277; 
in  Germany,  97,  109,  351,  352,  357, 
358;  in  Italy,  87;  statistics  of,  un- 
der old  age  and  invalidity  insur- 
ance, Germany,  (Table)  357;  num- 
ber, per  cent  and  disposition  of 
appeals  from  courts  of,  to  the  Im- 
perial Insurance  Office,  Germany, 
(Table)  109;  number,  per  cent  and 
disposition  of  awards  appealed  to 
courts  of,  Germany,  (Table)  109; 
total  number  of  appeals  and  num- 
ber of  these  decided  by  the  Im- 
perial Insurance  Department  under 
old  age  and  invalidity  insurance, 
Germany,  (Table)  358 


ASSESSMENT  PLAN:  old  age  insurance 
furnished  on,  304 

ASSESSMENTS.  See  Contributions;  Pre- 
miums 

ASSETS  AND  LIABILITIES:  of  insurance 
associations  in  Austria,  (Table)  131 

ASSOCIAZONE     DEGLI     INDUSTRIALI      D' 

ITALIA  PER  PREVENIRE  GLI  IXFOR- 
TUNI  DE  LAVORO,  ITALY,  89 

ASSUMPTION  OF  RISK:  employers'  lia- 
bility cancelled  by,  5,  6 

AUGUSTUSBAD:  convalescent  home,  259 

AUSFUHRUNGSBEHORDEN  (State  Boards 
of  Administration),  Germany,  96 

AUSTRALIA:  employers'  liability  in,  3 

AUSTRIA:  accident  department  of  the 
Patria,  116;  accident  insurance 
and  workmen's  compensation,  115- 
132;  administration  cost  of  insur- 
ance companies,  129,  130;  admin- 
istration of  compulsory  insurance 
law,  117;  agricultural  laborers  not 
generally  protected  by  insurance, 
122;  amount  of  burial  benefits  and 
pensions  paid,  (Table)  127;  Ans- 
talten,  117;  arbitration  in,  132, 
267,  276,  277;  assets  and  liabilities 
of  insurance  associations,  (Table) 
131;  Baukrankenkassen,  265;  Be- 
zirkskrankenkassen,  265,  268; 
Bruderladen,  263,  265;  classi- 
fication of  industries  by  hazards, 
(Table)  119;  compensation  for 
accidents,  117,  118;  compulsory 
insurance  in,  115,  116,  263,  264, 
399 ;  disposition  of  cases  by  courts 
of  arbitration,  (Table)  132;  Einge- 
schriebene  Hilfskassen,  265;  em- 
ployers' liability  in,  3;  employers' 
mutual  associations,  30,  31,  32; 
estimated  cost  of  insurance  to  em- 
ployers and  employes  in  reform 
project  in,  (Table)  420,  421;  Fab- 
rikskrankenkassen,  265,  268;  Gen- 
eral Accident  Insurance  Company 
of  Vienna,  116;  Genossenschafts- 
krankenkassen,  265;  increase  in 
number  of  work-accidents,  123, 
124,  125;  insurance  in  govern- 
ment departments,  33,  40;  insur- 
ance legislation  in,  115,  116,  117, 
121,  262,  263,  264,  265,  361,  362; 
insurance  of  employers  in  private 


446 


INDEX 


AUSTRIA  (continued) 

companies,  18;  invalidity  and  old 
age  insurance  in,  361-364;  Lehr- 
lingskrankenkassen,  265;  litigation 
in,  132;  number  and  annual  value 
of  current  permanent  pensions, 
(Table)  127;  number  of  estab- 
lishments insured,  122;  number  of 
full-time  workers  insured  and  pro- 
portion insured,  for  56  industries, 
(Table)  125,  126;  number  of  in- 
dustrial and  agricultural  establish- 
ments, average  number  of  em- 
ployes and  amount  of  wages  of  em- 
ployes insured  against  accidents 
in,  (Table)  122;  number  of  pen- 
sioners, average  annual  pension 
and  per  cent  of  wages,  (Table)  128; 
number  of  workmen  insured,  122; 
occupations  protected  by  compul- 
sory insurance,  116;  premiums  in, 
118,  119,  120,  121,  130,  131, 
363;  premiums,  interest  and  other 
income  of  the  seven  territorial 
associations,  (Table)  130;  pre- 
vention of  disease,  269;  preven- 
tion of  work-accidents,  121,  139, 
143,  144,  269;  protection  of  rail- 
way employes,  121;  rates  of  con- 
tribution in  the  seven  territorial 
insurance  organizations,  (Table) 
119;  rates  of  contributions  for  each 
danger  class,  (Table)  120;  ratio  of 
management  expenses  to  contribu- 
tions and  indemnities,  (Table)  130; 
reform  project  in,  414-420;  re- 
serves required  in,  121,  129,  131; 
sickness  insurance  in,  262-277; 
Society  of  Austrian  Industrial 
Workers  for  Accident  Insurance, 
116;  standing  of  stock  companies 
insuring  employers  in,  18;  total 
disbursements  of  insurance  asso- 
ciations in,  (Table)  129;  total 
number  of  accidents  and  number 
per  10,000  full-time  workers  by 
extent  of  disability,  (Table)  124; 
total  number  of  accidents  and 
number  per  10,000  full-time  work- 
ers in,  (Table)  123;  Vereine,  265, 
269;  voluntary  insurance  in,  121; 
wage  classification  of  insurance 
against  invalidity  and  old  age, 
(Table)  362;  work-accident  statis- 
tics compared  with  Germany,  125, 
126  127.  See  also  Appendices  I 
an,d  11,22-431 


AUSTRIA  (continued) 

Accident  insurance  and  workmen's 
compensation  in,  115-132.  See 
also  under  general  topics 

Invalidity  insurance  in:  administra- 
tion cost  of,  363 ;  administration  of 
363;  amount  of  pensions  under, 
127,  128,  129;  benefits  under,  283 
361,  363;  contributions  to,  362, 
363;  employers'  independent  or- 
ganizations for,  364;  legislation 
affecting,  361,  362;  miners  pro- 
tected by,  361;  office  employes 
protected  by,  361;  premiums,  363 ; 
reserves  for,  362;  Social  Demo- 
crats demand  one  law,  applicable 
to  all,  364;  wage  classification  of, 
(Table)  362 

Maternity  insurance  in,  166,  167 

Old  age  insurance  in :  administration 
cost  of,  363 ;  administration  of,  363 ; 
benefits  under,  361,  363;  contribu- 
tions to,  362,  363;  employers'  in- 
dependent organizations  for,  364, 
legislation  affecting,  361,  362; 
miners  protected  by,  361;  office 
employes  protected  by,  361;  pre- 
miums, 363;  reserves  for,  362; 
schemes  for,  under  consideration 
305;  Social  Democrats  demand 
one  law,  applicable  to  all,  364; 
wage  classification  of,  (Table)  362 

Pensions  to  widows  and  orphans  in, 
127,  128,  129 

Sickness  insurance  societies  in:  ap- 
peals from  courts  of  arbitration, 
(Table)  277;  arbitration,  267,  276, 
277;  average  benefits  per  day  and 
per  case  of  sickness  and  per  death 
in,  (Table)  273;  average  contribu- 
tion and  average  benefit  per  mem- 
ber in,  (Table)  274;  benefits  under, 
265,  266,  272,  273;  benefits  under, 
compared  with  Germany,  272,  273; 
"building  trades,"  265;  cases  and 
days  of  sickness  and  death  rate  in, 
(Tables)  270,  271;  contributions  to, 
263,  264,  266,  274,  275;  develop- 
ment of,  262,  263,  264;  district, 

265,  268;    employer  penalized  for 
employing  workmen  uninsured  in, 

266,  267;    factory,  265,  268,  270; 
federation  of,  in  Vienna,  143,  144; 
financial  condition  of,  (Table)  275; 
financial  condition  of,  in  percent- 
ages, (Table)  276;  income  and  dis- 
bursements, (Table)  274;    legisla- 


447 


INDEX 


AUSTRIA 

Sickness  insurance  societies  in  (con- 
tinued) 

tion  affecting,  262,  263,  264,  265; 
number,  (Table)  266;  number  and 
membership  of,  (Table)  267,  268; 
per  cent  of  sexes  in,  (Table)  267; 
private  friendly,  265,  269;  protec- 
tion of  apprentices  and  miners  by, 
263,  265;  ratio  of  various  benefits 
to  total  benefits  in,  (Table)  273; 
ratio  of  various  items  of  expendi- 
ture to  total  expenditure,  and  in- 
come and  amount  expended  per 
member  in,  (Table)  272;  registered 
mutual,  265;  reserves,  275,  276; 
sickness  rate  in,  compared  with 
Germany,  270;  solvency  of,  130, 
J31.  275>  2?6;  total  benefits  and 
other  expenditures  of,  (Table)  271; 
total  number  of  cases  and  days  of 
sickness,  and  deaths  in,  (Table) 
269;  trade-guild,  265;  trade  union, 
264;  types  of,  265 
Unemployment  insurance  in,  391 

AUSTRIAN  GENERAL  ACCIDENT  INSUR- 
ANCE COMPANY  OF  VIENNA,  116 

"AUTHORIZED"    SICKNESS   INSURANCE 
SOCIETIES:  in  France,  201,  202 

AVERAGE  PREMIUM:    old  age  insurance 
furnished  on  basis  of,  304 

BASEL:    unemployment  insurance   in, 

386, 387 

BAUKRANKENKASSEN,  Austria,  265 
BELGIUM  :  accident  insurance  and  work-  , 
men's  compensation  in,  61-63; 
Caisse  G6nerale  d'fipargne  et  de 
Retraite,  320,  321;  Compagnie 
Beige  d'Assurance  Generate  sur  la 
Vie,  63;  compensation  for  work-ac- 
cidents, 62;  compulsory  insurance  of 
miners  in,  63;  cooperation  between 
friendly  societies  and  state  depart- 
ment, 321;  employers'  liability  in, 
3;  employers'  mutual  associations, 
19,  28,  29;  employers  not  released 
from  liability  by  insurance  in  for- 
eign companies,  62;  employers 
released  from  liability  by  insurance 
in  Belgian  Company,  21,  22;  Guar- 
antee Fund,  63;  insurance  com- 
panies in,  22,  62,  63;  insurance  in 
government  departments,  34,  35, 
36,  63;  insurance  legislation,  61, 


BELGIUM  (continued) 

199,  200,  320,  321;  insurance  not 
compulsory  in,  62;  insurance  of 
employers  in  private  companies, 
19,  21,  22,  24,  25;  invalidity  and 
old  age  insurance  in,  320-322; 
number  and  amount  of  deposits 
and  amount  of  annuities  in  state 
annuity  fund,  (Table)  322;  occu- 
pations protected  by  workmen's 
compensation  act,  61;  reserves 
required  in,  24;  sickness  insurance 
in,  199-201 ;  standing  of  stock  com- 
panies insuring  employers,  19,  34, 
35 ;  survivorship  annuities,  289. 
See  also  Appendices  I  and  II,  422- 

431 

Accident  insurance  and  workmen's 
compensation  in,  61-63.  See  also 
under  general  topics. 

Invalidity  insurance  in:  benefits  un- 
der, 320,  321;  contributions  10,321, 
322;  legislation  affecting,  320,321 

Old  age  insurance  in:  benefits  under, 

320,  321;    compulsory  system   of, 
for  miners,  322;    contributions  to, 

321,  322;  legislation  affecting,  320, 
321 

Sickness  insurance  societies  in :  bene- 
fits under,  200;  contributions  to, 
200;  development  of,  199;  legisla- 
tion affecting,  199,  200;  privileges 
granted  certain,  199;  registered 
and  unregistered,  200 

Unemployment  insurance  in:  bene- 
fits under,  384;  contributions,  384; 
in  Ghent,  371,  373,  384,  in  trade 
unions,  384;  legislation  affecting, 

384 

BENEFITS:  average  contribution  and 
.average  benefits  per  member  in 
sickness  insurance  societies,  Aus- 
tria, (Table)  274;  average,  per  day, 
per  case  of  sickness  and  per  death 
in  sickness  insurance  societies, 
Austria,  (Table)  273;  character 
and  value  of,  paid  by  mutual  sick- 
ness insurance  societies,  France 
(Table)  208;  death,  average  amount 
of,  in  sickness  insurance  societies, 
Germany,  (Table)  245;  expendi- 
tures for,  for  old  age,  sickness  and 
invalidity,  Germany,  (Table)  356; 
furnished  by  trade  unions,  150, 
151;  furnished  by  trade  unions, 
Great  Britain,  27,  28;  in  Law, 
Union  and  Crown  Insurance 


448 


INDEX 


BENEFITS  (continued) 

Company,  Great  Britain,  (Table) 
45;  in  Local  Society  of  Leipsic, 
258;  membership  and  amount 
of  sick  benefit,  including  those 
for  women  before  and  after  con- 
finement, in  sickness  insurance 
societies,  Germany,  (Table)  246; 
membership  and,  of  Unemploy- 
ment department  of  Umanitaria, 
Italy,  (Table)  388;  number  and 
membership  of  trade  unions  in 
France  which  pay  benefits,  (Table) 
21 1 ;  number  and  per  cent  of  sick- 
ness insurance  societies  in  Switzer- 
land, and  per  cent  of  their  member- 
ship by  kind  of  benefits,  (Table) 
217;  percentage  of  various  kinds 
of,  paid  in  sickness  insurance  so- 
cieties, Germany,  (Table)  248; 
ratio  of  various  benefits  to  total, 
in  sickness  insurance  societies,  Aus- 
tria, (Table)  273;  sick,  average 
per  member  in  sickness  insurance 
societies,  Germany,  (Table)  245; 
total,  and  other  expenditures  of 
sickness  insurance  societies,  Aus- 
tria, (Table)  271;  total  disability 
and  death,  in  sickness  insurance 
societies,  Germany,  (Table)  247; 
total,  per  member  in  sickness  in- 
surance societies,  Germany,  (Table) 
248;  total  sick,  paid  in  sickness 
insurance  societies,  Germany, 
(Table)  244 

Under  funeral  and  burial  insurance: 
in  Denmark,  192;  in  Great  Britain, 
164;  in  Holland,  197 

Under  invalidity  insurance:  in  Aus- 
tria, 283, 361, 363;  in  Belgium,  320, 
321;  in  Germany,  283,  284,  347, 
348,  35°,  3555  in  Italy,  344, 
345 

Under  maternity  insurance:  in  Ger- 
many, 246 

Under  old  age  insurance:  in  Austria, 
361,363;  in  Belgium,  320,  321;  in 
Denmark,  318;  France,  323,  324, 
325,  327,  328,  329,  330,  331,  333, 
334,  335,  336,  337,  338;  Germany, 
347,  348,  349,  355;  in  Great  Brit- 
ain, 314,  315;  in  Italy,  344,  345; 
in  Switzerland,  340,  341,  342 

Under  sickness  insurance  societies, 
148;  in  Austria,  265,  266,  272,  273; 
in  Belgium,  200;  in  Denmark,  189, 
190,  191;  in  France,  208,  209,  210, 


BENEFITS 

Under    sickness    insurance    societies 

(continued) 

211;  in  Germany,  154,  234,  235, 
242,  243,  244,  245,  246,  247,  248 
251,  257,  258,  259,  262;  in  Ger- 
many, (Table)  251;  in  Great 
Britain,  170;  in  Holland,  193,  194, 
195,  196;  in  Italy,  225,  226;  in 
Norway,  184;  in  Sweden,  188;  in 
Switzerland,  217,  220,  221 

Under  unemployment  insurance:  in 
Belgium,  384;  in  Denmark,  381; 
in  France,  385;  in  Germany,  389, 
390;  in  Holland,  383;  in  Italy,  387, 
388;  in  Switzerland,  387 

BERNE:  Unemployment  insurance  in, 
386 

BERUFSGENOSSENSCHAFTEN,  Switzer- 
land, 76 

BETRIEBSKRANKENKASSEN,  Germany, 
233,  236,  238 

BEZIRKSKRANKENKASSEN,  Austria,  265, 
268 

BORE,  Sweden,  53 

BRABROOK,  E.  W.:  "Provident  Socie- 
ties," by, 181 

BRUDERLADEN,  Austria,  263,  265 

BUILDING  TRADES  ACCIDENT-INSUR- 
ANCE LAW:  in  Germany,  99 

BUILDING  TRADES  SICKNESS  INSURANCE 
SOCIETIES:  in  Austria,  265;  in  Ger- 
many, 233 

BURIAL  BENEFITS:  amount  of,  and 
pensions  paid,  Austria,  (Table)  127 

BURIAL  INSURANCE.  See  Funeral  and 
Burial  Insurance 


CAISSE  DE  PREVOYANCE  des  marins 
francais  centre  les  risques  et  acci- 
dents de  leur  profession,  France, 
72 

CAISSE  DES  DEPOTS  ET  CONSIGNATIONS, 
France,  322,  323,  324, 327, 336 

CAISSE  DES  INVALIDES  DE  LA  MARINE, 
France,  333,  334 

CAISSE  GENERALE  D'£PARGNE  ET  DE 
RETRAITE,  Belgium,  320,  321 

CAISSE  NATIONALS  D'ASSURANCE  EN 
CAS  D'ACCIDENTS,  France,  64 


29  F 


449 


INDEX 


CAISSE    NATIONALS    DES    RETRAITES,  ] 
France:  annuities  granted  at  dif-  j 
ferent  ages  for  an  annual  premium 
of  one  franc,  (Table)  328;    collec-  j 
live  deposits  in,  (Table)  326;    in- 
dividual deposits  according  to  size 
in,    (Table)    325;       number    and 
amount  of  payments  and  amount  of 
reserves  in,  (Table)  324;    number 
and  value  of  annuities  since  1851    ] 
and  in  force  December  31,  1906, 
(Table)  330;    payments  under  the  j 
principal  not-returnable  and  prin- 
cipal returnable  plans,  (Table)  329   j 

CAISSE    NATIONALS    DES    RETRAITES  ! 
POUR  LA  VIEILLESSE,  France,  322,   | 
323,  324,  325,  326,  327,  328,  329, 
33°,  33i,  332,  333,  335 

CANTON    NEUENBURG,    SWITZERLAND: 
number  and  value  of  policies  in 
and  amount  of  cantonal  subsidy  to   j 
insurance  department,  (Table)  340  j 

CANTON  WAADT,  SWITZERLAND:  annui-  j 
ties  secured  at  the  age  of  sixty 
.     .     with   annual   subsidys  from, 
(Table)  342;   annuities  secured  by 
annual  payment  of  10  francs,  with- 
out subsidy  from,  (Table)  342 

CAPITALIZATION  or  ANNUITIES:  in  Hol- 
land, 58;  not  required  in  Germany, 
112 

CAPITALIZED  VALUE:  old  age  insurance 
furnished  on  basis  of,  304 

CASSA  NAZIONALE  DI  ASSICURAZIOXE 
PER  GLI  infortuni  degli  operai  sul 
lavoro,  Italy,  82 

CENTRAL  COMMISSION  OF  THE  SICKNESS 
SOCIETIES  OF  BERLIN,  261 

CENTRALIZED  SICKNESS  INSURANCE 
SOCIETIES:  advantages  of,  157, 158 

CHILDREN  ENROLLED  IN  SICKNESS  IN- 
SURANCE SOCIETIES:  in  France, 
202,  203,  205;  in  Switzerland,  217 

CITY  EMPLOYES:  protected  by  old  age 

pensions,  in  Norway,  316 
COMMON  LAW  LIABILITY:  in  Denmark, 

56;  in  Great  Britain,  44,  46,  56 
"COMMUNAL"     SICKNESS    INSURANCE 

SOCIETIES:     in  France,  209,  210; 

in  Germany,  230,   231,   232,   233, 

236,  238 
COMPAGNIE  BELGE  D'ASSURANCE  GEN- 

ERALE  SUR  LA  VIE,  Belgium,  63 


COMPENSATION:  average  amounts  ex- 
pended for,  per  person  injured  and 
member  treated,  Germany,  (Table) 
1 08;  classified  by  kind  of  expendi- 
ture, Germany,  (Table)  107;  for 
accidents,  care  necessary  in  dis- 
bursing, 35;  granted  seamen,  in 
France,  73;  granted  seamen,  in 
Italy,  86;  number  of  employes, 
accidents  and  diseases,  and  com- 
pensation paid  in  certain  indus- 
tries, Great  Britain,  (Table)  47; 
workingmen's  accidents  and  com- 
pensation paid  in  factories  and 
trades,  Switzerland,  (Table)  75. 
See  also,  Work-accidents;  Work- 
men's Compensation  Act 

COMPULSORY  AND  VOLUNTARY  INSUR- 
ANCE: discussion  of  merits  of,  401, 
402,  403 

COMPULSORY  BASIS:  old  age  insurance 
furnished  on,  304 

COMPULSORY  INSURANCE:  administra- 
tion of  law,  in  Austria,  117;  atti- 
tude of  employers,  associations,  and 
workingmen  toward,  in  German}-, 
141,  142;  explanation  of,  399,  400, 
401,  402,  403;  in  Austria,  115,  116, 
IJ7>  399 j  m  establishment  socie- 
ties, 152;  in  Belgium,  62;  in  Den- 
mark, 55;  in  France,  64,  68;  in 
Germany,  90, 93,95,96,98,99, 100, 
108,  no,  112,  141,  142,  399,  400, 
401,  402,  403;  in  Great  Britain, 
44;  in  Holland,  58;  in  Italy,  41, 
83,  84,  85,  86,  87;  in  Norway,  48, 
49;  in  Sweden,  54;  number  of 
societies,  Switzerland,  (Table)  218; 
occupations  protected  by,  in  Aus- 
tria, 116,  in  Germany,  93,  95,  98, 
99, 100,  in  Holland,  58,  in  Italy,  84, 
in  Norway,  48;  of  certain  employes, 
29,  30;  of  employers,  4;  of  miners, 
in  Belgium,  63;  of  seamen,  in 
France,  72,  73;  of  seamen,  in  Italy, 
86,87;  of  sulphur  miners,  in  Italy, 
86,  87;  operation  of,  in  Germany, 
95,  96,  108,  no;  pensions  to  wid- 
ows and  orphans  under,  290,  291, 
292,  293;  proposed  extension  of,  to 
cover  pensions  to  widows  and  or- 
phans. Germany,  293;  special 
societies,  in  Italy,  86,  87;  trade 
unions  in  Great  Britain  demand 
in  government  departments,  48 


450 


INDEX 


COMPULSORY  INVALIDITY  INSURANCE: 
in  Germany,  347;  persons  exempt 
from,  Germany,  347;  recommend- 
ed by  commission,  Norway,  285, 
286 

COMPULSORY  OLD  AGE  INSURANCE: 
beneficiaries  of,  France,  335;  for 
miners  and  seamen,  France,  322, 
332,333;  for  miners,  Belgium,  322; 
in  France,  322,  332,  333,  334;  in 
Germany,  347 

COMPULSORY  SICKNESS  INSURANCE: 
certain  citizens  exempt  from,  Nor- 
way, 157;  effect  of,  Germany,  241, 
242;  for  all  wage-earners,  Norway, 
157;  for  city  employes,  Norway, 
316;  in  Austria,  263,  264;  in  Ger- 
many, 155,  228,  229,  230,  232,  235; 
not  general,  155;  persons  exempt 
from,  Germany,  347;  societies, 
compared  with  voluntary,  Ger- 
many, 236,  237;  systems  of,  su- 
perior to  voluntary  systems,  157; 
welfare  of  state  requires,  Italy,  227; 
workmen  unprotected  by,  Ger- 
many, 235 

COMPULSORY  UNEMPLOYMENT  INSUR- 
ANCE: success  of,  problematical, 
377 

CONDITIONS  SURROUNDING  SICKNESS 
INSURANCE:  in  various  countries, 
155,  156 

CONTINENTAL  COUNTRIES:  employers' 
mutual  associations,  28 

CONTRIBUTIONS:  amount  and  value  of 
policies  in  and  amount  of  cantonal 
contributions,  to  insurance  de- 
partment, Canton  Neuenburg, 
(Table)  340;  annual  pensions  and 
government  contributions,  by  wage 
class,  under  invalidity  insurance, 
Germany,  (Table)  350;  annual 
pensions  and  government  contri- 
butions, by  wage  class,  under  old 
age  insurance,  Germany,  (Table) 
349;  average,  and  average  benefit 
per  member  in  sickness  insurance 
societies,  Austria,  (Table)  274; 
in  Local  Society  of  Leipsic,  258; 
in  societies  insuring  pensions  to 
widows  and  orphans,  291,  292, 
293;  insurance,  in  Germany,  249, 
2S°,  257,  348;  joint  weekly,  for 
old  age  and  invalidity  insurance 
by  wage  class,  Germany,  (Table) 


CONTRIBUTIONS  (continued) 

348;  proposed,  for  old  age  and  in- 
validity insurance,  in  reform  pro- 
ject, Germany,  (Table)  413;  rates 
of,  for  each  danger  class,  Austria, 
(Table)  120;  rates  of,  in  the  seven 
territorial  insurance  organizations, 
Austria,  (Table)  119;  to  establish- 
ment funds,  4 

To  invalidity  insurance:  in  Austria, 
362,363;  in  Belgium,  321,322;  in 
Germany,  283,  348,  349,  350,  359, 
360;  in  Italy,  343,  345,  346 

To  old  age  insurance:  in  Austria,  362, 
363;  in  Belgium,  321,322;  in  Den- 
mark, 318;  in  France,  332,  333, 
334,  3355  in  Germany,  307,  348, 
349,  359,  360;  in  Great  Britain, 
314;  in  Italy,  343,  345,  346;  in 
Switzerland,  340,  341 

To  old  age  pensions,  300        ^ 

To  sickness  insurance  societies:  in 
Austria,  263,  264,  266,  274,  275; 
in  Belgium,  200;  in  Denmark,  189; 
in  France,  202,  205,  207,  212;  in 
Germany,  155,  234,  (Tables)  249, 
250,  251;  in  Great  Britain,  180, 
181;  inltaly,  224;  inNorway,  184, 
316;  in  Sweden,  187;  in  Switzer- 
land, 223 

To  unemployment  insurance:  in 
Belgium,  384;  in  Denmark,  381; 
in  France,  384,  385;  in  Germany, 
388,  389,  390;  in  Holland,  383; 
in  Italy,  387;  in  Switzerland,  386, 
387 

CONTRIBUTIONS  AND  BENEFITS  of 
Workingrnen's  Insurance  in  Ger- 
many, 1907,  Appendix  II,  430 

CONTRIBUTIONS  NON-RETURNABLE.  See 
Premiums  non-returnable;  Princi- 
pal non-returnable 

CONTRIBUTIONS  RETURNABLE:  in  old 
age  and  invalidity  insurance,  Ger- 
many, 350,  357.  See  also,  Premi- 
ums returnable;  Principal  return- 
able 

CONTRIBUTIONS  RETURNED:  number 
and  value  of,  under  old  age  and 
invalidity  insurance,  (Table)  357; 
number  of,  and  of  pensions,  and 
number,  per  cent  and  disposition 
of  appeals  by  courts  of  arbitration 
under  old  age  and  invalidity  in- 
surance, (Table)  357 


451 


INDEX 


CONTRIBUTORY  NEGLIGENCE:    employ- 
ers' liability  cancelled  by,  5 
COST.   See  Administration  Cost 


DAMAGES:  adjustment  of,  in  Great 
Britain,  21;  assessed  by  state  in 
certain  cases,  Sweden,  23;  employ- 
ers' liable  for,  3;  equalization  of 
burden  of,  3 

DEATH:  insurance  against,  146-277 

DEATH  RATE:  decrease  in,  in  sickness 
insurance  societies,  Germany,  242 

DEGREES  OF  IMPAIRMENT:  Proportion 
of,  in  Denmark,  (Table)  57 

DENMARK:  accident  insurance  and 
workmen's  compensation  in,  54- 
57;  adjustment  of  claims  by  state, 
22,  23;  administration  of  employ- 
ers' liability  law  in,  55,  57;  Ar- 
bejder  Forsikrings  Raad,  55,  57; 
common  law  liability  in,  56;  com- 
pensation for  work-accidents  in,  55 ; 
disbursements  of  the  Fremtiden, 
(Table)  191;  employers'  liability 
in,  3;  employers'  mutual  associa- 
tions, 19,  28,  29;  Fremtiden,  190, 
191,192;  insurance  companies,  22, 
23;  insurance  in  government  de- 
partments, 34;  insurance  legisla- 
tion, 54,  55,  56,  189;  insurance  not 
compulsory,  55;  insurance  of  em- 
ployers in  private  companies,  19, 
22,  24;  invalidity  and  old  age  in- 
surance in,  318-319;  law  covering 
agriculture  and  forestry,  56;  law 
covering  fishermen  and  seamen,  56; 
legislation  affecting  workmen's 
compensation,  55;  movement 
toward  complete  and  connected 
system  of  insurance,  395;  no  liti- 
gation in,  23;  occupations  pro- 
tected by  employers'  liability,  55; 
prevention  of  work-accidents,  137; 
proportions  of  degrees  of  impair- 
ment in  accident  cases  in,  (Table) 
57;  receipts  and  disbursements  of 
unemployment  funds,  (Table)  383; 
reinsurance  scheme  in,  163;  re- 
serves required,  24;  sickness  in- 
surance in,  189-192;  Statsanstalt 
for  Livsforsikring,  34,  288;  sur- 
vivorship annuities,  288,  289,  301; 
voluntary  invalidity  insurance  rec- 
ommended by  commission,  286; 


DENMARK  (continued) 

work-accidents  reported  to  state 
22.  See  also  Appendices  I  and  II, 
422-431 

Accident  insurance  and  workmen's 
compensation  in,  54-57.  See  also 
under  general  topics 

Funeral  and  burial  insurance  in: 
benefits  under,  192;  complete 
separation  of,  from  sickness  in- 
surance required,  162,  163 

Invalidity  insurance  in,  285;  com- 
mission studying,  319 

Old  age  insurance  in,  301 ,310;  benefits 
under,  318;  contributions  to,  318; 
substitute  for  outdoor  relief,  309 

Sickness  insurance  societies  in:  ad- 
ministration cost  of,  191;  benefits 
under,  189,  190,  191;  contributions 
to,  189;  legislation  affecting,  189; 
membership  of,  189;  solvency  of, 
190;  state  supervision  of,  190 

Unemployment  insurance  in,  373, 
374,  380-382;  benefits  under,  381; 
contributions,  381 ;  in  trade  unions, 
380,381;  legislation  affecting,  380; 
premiums,  382;  receipts  and  dis- 
bursements, 382;  receipts  and  dis- 
bursements of  funds  for  eight 
months  ending  March  31,  1908, 
(Table)  382 

DEVELOPMENT:  of  employers'  insur- 
ance laws,  133,  134,  135;  of  em- 
ployers' liability  insurance  in  the 
United  States,  14,  15,  16,  17,  18; 
of  employers'  liability  law,  5,  6,  7, 
n;  of  old  age  insurance, 313,314; 
of  sickness  insurance  societies,  171, 
172,  173,  193,  199,  201,  216,  217, 
224,  227,  228,  229,  230,  231,  232, 
256,  262,  263,  264;  of  societies  in- 
suring pensions  to  widows  and 
orphans  in  Great  Britain,  287, 
288,  290;  of  unemployment  insur- 
ance, 367,  368;  of  workmen's  com- 
pensation laws,  133,  134,  135 

DISABILITY.    See  Invalidity 

DISBURSEMENTS:  and  receipts  of  un- 
employment funds  for  eight  months 
ending  March  31,  1908,  Denmark, 
(Table)  383;  for  old  age  and  inva- 
lidity insurance,  Germany,  (Table) 
358;  income  and,  of  all  sick- 
ness insurance  societies,  Germany, 
(Table)  253;  income  and,  of  sick- 
ness insurance  societies,  Germany, 


452 


INDEX 


DISBURSEMENTS  (continued) 

(Table)  274;  of  Local  Society  of 
Leipsic,  (Table)  260;  of  the  Frem- 
tiden,  Denmark,  (Table)  191; 
total  income  and,  of  sickness  in- 
surance societies,  Germany,  (Table) 
254;  total,  of  insurance  associa- 
tions, Austria,  1 29 

DISEASES.    See  Occupational  diseases 

DISTRICT  SICKNESS  INSURANCE  SOCIE- 
TIES, Austria,  265,  268 

DUES.    See  Contributions;  Premiums 


ECONOMY:  of  various  systems  of  in- 
surance, 135 

ElNGESCHRIEBENE   HlLFSKASSEN,    AuS- 

tria,  265 

EMPLOYERS:  attitude  of,  toward  com- 
pulsory insurance,  in  Germany, 
141;  attitude  of,  toward  old  age 
insurance,  307;  liable  for  dam- 
ages, 3 

EMPLOYERS' INSURANCE:  compulsory,  4 

EMPLOYERS'  INSURANCE  LAWS:  devel- 
opment of,  133,  134,  135 

EMPLOYERS'  LIABILITY,  3-13;  can- 
celled by  "  assumption  of  risk,"  5,  6; 
cancelled  by  contributory  negli- 
gence, 5;  cancelled  by  neglect  of 
fellow  workmen,  6,  7;  cancelled  in 
France  by  victim's  gross  negli- 
gence, n;  change  in  European 
thought  concerning,  4,  5,  8,  9,  10, 
n,  12,  13;  in  Australia,  3;  in  Aus- 
tria, 3;  in  Belgium,  3,  21,  22;  in 
Denmark,  3,  55,  57;  in  Finland,  3; 
in  France,  3,  n,  66,  67;  in  Ger- 
many, 3,  91,  93;  in  Great  Britain, 
3,  n,  21,  33,  34,  42,  46;  in  Greece, 
3;  in  Holland,  3,  57;  in  Italy,  3; 
in  New  Zealand,  3;  in  Norway,  3; 
in  Quebec,  3;  in  Russia,  3;  in 
Spain,  3;  in  Sweden,  3,  51;  in 
Switzerland,  75,  81;  in  the  United 
States,  3,  17;  law  of  negligence 
governing,  5,  n,  17;  occupations 
protected  by,  in  Denmark,  55,  in 
Great  Britain,  43,  in  Sweden,  51; 
released  from,  by  insurance  in  Bel- 
gian company,  21,  22;  state  in- 
surance releases,  3,  20;  theory  of 
negligence  in,  4-8.  See  also  Leg- 
islation affecting  workmen's  COW- 


EMPLOYERS'  LIABILITY  (continued) 

pensation;    Workmen's  Compensa- 
tion Act 

EMPLOYERS'  LIABILITY  INSURANCE: 
compensation  plan  mere  econom- 
ical than,  10;  conditions  attending 
settlements  under,  8,  14, 15,  16, 17, 
18;  contrary  to  public  policy,  14, 
15,  16,  17;  development  of,  in 
United  States,  14,  15,  16,  17,  18; 
indemnification  to  employer  un- 
der, 15 

EMPLOYERS'  LIABILITY  INSURANCE 
COMPANIES:  reports  required  from, 
in  Great  Britain,  33,  34;  state  com- 
petition interferes  with  operation 
of,  25 

EMPLOYERS'  LIABILITY  LAW:  adminis- 
tration of,  in  Denmark,  55,  57,  in 
France,  66,  67;  development  of, 
5,6,7,11;  in  Great  Britain,  n,  21 ; 
number  entitled  to  benefits  under, 
Switzerland,  81;  operation  of, 
Germany,  93;  operation  of,  Swit- 
zerland, 75;  workmen's  compensa- 
tion laws  a  substitute  for,  or  supple- 
mentary to,  in  European  countries, 

18,  19 

EMPLOYERS'  MUTUAL  ASSOCIATIONS: 
advantages  of,  32;  economy  in  op- 
eration of,  32;  effect  upon  efficiency 
of  labor,  139,  140,  141;  fund- 
amental weakness  of,  142,  143;  in 
Austria,  30,  31,  32;  in  Belgium, 

19,  28,   29;    in  competition  with 
stock  companies  and  state  depart- 
ments,  29;    in   continental   coun- 
tries, 28;   in  Denmark,  19,  28,  29; 
in  Finland,  19;   in  France,  19,  28, 
29;  in  Germany,  28,  29,  30,  31,  32, 
95,  96,  99,  100,  101,  104,  in,  112, 
113,  114,  115,  135,  136;   in  Great 
Britain,  19,  26,  27,  28,  29,  46;   in 
Holland,  20,  28,  29;  in  Italy,  19,  20, 
28,  29,  85,  86;    in  Russia,  19;    in 
Sweden,  20,  28,  29;  in  Switzerland, 
19,  20,  28,  29;  reserves  carried  by, 
24,  29,  30,  31,  32;  solvency  of,  29; 
under  government  compulsion  and 
supervision  more  successful,   135, 
136.     See  also  Sickness  insurance 
societies 

EMPLOYERS  PENALIZED:  for  employing 
uninsured  workmen,  Austria,  266, 
267;  for  employing  uninsured 
workmen,  Germany,  155,  234 


453 


INDEX 


EMPLOYERS  NOT  RELEASED  FROM  LIA- 
BILITY: by  insurance  in  foreign 
companies,  Belgium,  62;  by  in- 
surance in  private  companies,  3, 19, 
20,44,52 

EMPLOYERS  RELEASED  FROM  LIABILITY: 
in  France,  65,  66 

EMPLOYES:  not  paid  for  occupational 
risk,  ii,  12,  13 

ENGLAND:  Old  age  insurance  in,  308, 
310 

ENKEKASSE,  Norway,  316 

ESTABLISHMENT  FUNDS,  151,  152,  153; 
compulsory  insurance  in,  152; 
effect  of,  on  trade  unions,  153; 
in  France,  28,  69;  insurance  of 
employers  by  contribution  to,  4; 
Krupp  works,  28;  provide  for  in- 
validity insurance,  282;  provide 
for  old  age  pensions,  297,  298,  299, 
300;  reserves  in,  153,  154;  sur- 
vivorship annuities  provided  for 
in,  289,  290,  291;  trade  unions  in 
Great  Britain  oppose,  27 

ESTABLISHMENTS  INSURED  :  number 
of,  in  Austria,  122,  in  Holland,  61 

EUROPE:  standing  of  stock  companies 
insuring  employers  in,  1 8, 19 

EUROPEAN  GOVERNMENT  EMPLOYES  : 
service  pensions  for,  315 

EXPENDITURES  :  and  income  of  sickness 
insurance  societies,  Switzerland, 
(Table)  219;  estimated,  by  govern- 
ment on  account  of  insurance, 
Switzerland,  81;  in  sickness  insur- 
ance societies,  Austria,  (Table) 
272;  per  cent  of,  in  sickness  in- 
surance societies,  Italy,  (Table) 
226 


FABRIKSKRANKENKASSEN,  Austria,  265, 
268 

FACTORY  SICKNESS  INSURANCE  SOCIE- 
TIES: in  Austria,  265,  278,  270;  in 
Germany,  233,  236,  238 

FATAL  ACCIDENTS  ACT:  in  Great  Bri- 
tain, 44 

FEDERATED  SOCIETIES.  See  Affiliated 
or  federated 

FEDERATION  OF  SICKNESS  INSURANCE 
SOCIETIES:  prevention  of  work- 
accidents  by,  in  Vienna,  143,  144 


FINANCIAL  CONDITION:  of  sickness  in- 
surance societies,  in  Austria, 
(Table)  275;  the  same,  in  per- 
centages, (Table)  276 

FINLAND:  employers'  liability  in,  3; 
employers'  mutual  associations  in, 
19;  insurance  of  employers  in  pri- 
vate companies,  19 

FISHERMEN:  insurance  law  covering,  in 
Denmark,  56 

FOREIGN  COMPANIES:  insurance  in, 
does  not  release  employer  from 
liability  in  Belgium,  62 

FORENIGEN  ENIGHET  GER  STYRKA, 
Sweden,  187,  188 

FRANCE:  accident  insurance  and  work- 
men's compensation  in,  64-73; 
administration  of  employers'  lia- 
bility law,  66, 6  7 ;  annuities  granted 
at  different  ages  for  an  annual 
premium  of  one  franc,  Caisse 
Nationale  des  Retraites,  (Table) 
328;  annuity  secured  by  annual 
payment  of  1 2  francs  in  La  France 
Prevoyante,  (Table)  338;  Caisse 
de  preVoyance  des  marins  fran- 
cais  centre  les  risques  et  accidents 
de  leur  profession,  72;  Caisse  des 
D6p6ts  et  Consignations,  322,  323, 
324,327,336;  Caisse  des  Invalides 
de  la  Marine,  333,  334;  Caisse 
nationale  d'assurance  en  cas  d'ac- 
cidents,  64;  Caisse  Nationale  des 
Retraites  pour  ;la  Vieillesse,  322, 
323,  324,  325,  326,  327,  328,  329, 
330,  33i,  332,  333,  3355  character 
and  value  of  benefits  paid  by 
mutual  sickness  insurance  socie- 
ties in,  (Table)  208;  choice  of 
physicians  in,  71;  collective  de- 
posits in  the  Caisse  Nationale  des 
Retraites,  (Table)  326;  compensa- 
tion for  work-accidents,  65;  com- 
pensation granted  seamen,  73; 
compulsory  insurance  of  seamen, 
72,  73;  distribution  of  insurance 
among  companies,  (Table)  68; 
employers'  liability  cancelled  by 
victim's  gross  negligence,  n;  em- 
ployers' liability,  3;  employers' 
mutual  associations,  19,  28,  29; 
employers  released  from  liability, 
65,  66;  establishment  funds,  28, 
69;  fatalities  and  injuries  in  mines 
and  quarries,  (Table)  71;  growth 


454 


INDEX 


FRANCE  (continued) 

of  national  guarantee  fund,  (Table) 
70;  income  of  approved  and  free 
societies,  (Table)  206;  increase  in 
number  of  work-accidents,  71; 
increase  of  free  and  approved  so- 
cieties, (Table)  204;  individual 
deposits  according  to  size  in  the 
Caisse  Nationale  des  Retraites, 
(Table)  325;  insurance  companies, 
68;  insurance  in  government  de- 
partments, 34;  insurance  of  em- 
ployers in  private  companies,  19, 
21,  22,  25;  insurance  legislation  in, 
64,  67,  72,  73,  201,  202,  203,  205, 

210,    211,   322,   324,   327,   329,   330, 

33i,  332,  333,  334,  335;  insurance 
not  compulsory,  64,  68;  invalidity 
and  old  age  insurance,  322-340; 
L'Abeille,  69;  La  France  Prevoy- 
ante,  337,  338;  legislation  affect- 
ing agricultural  laborers,  72;  legis- 
lation affecting  seamen,  72;  legis- 
lation affecting  workmen's  com- 
pensation, 64,  67,  72,  73;  Les  Mu- 
tualites  Maternelles,  214;  litiga- 
tion in,  21 ;  L'Union  du  Commerce, 
208,  209;  membership  of  free  and 
approved  societies,  (Table)  204; 
monthly  dues  charged  by  com- 
munal sickness  insurance  societies, 
(Table)  210;  movement  toward 
complete  and  connected  system  of 
insurance,  394,  395,396;  National 
Guarantee  Fund,  69;  number  and 
amount  of  payments  and  amount 
of  reserves  in  the  Caisse  Nationale 
des  Retraites,  (Table)  324;  num- 
ber and  membership  of  trade 
unions  which  pay  benefits,  (Table) 
21 1 ;  number  and  value  of  annui- 
ties in  Caisse  Nationale  des  Re- 
traites, (Table)  330;  number  of 
accidents  in  various  industries, 
(Table)  70;  number  of  beneficia- 
ries of  approved  and  free  societies, 
(Table),  206,  207;  number  of  work- 
men insured,  68;  occupations  pro- 
tected by  workmen's  compensation 
act,  64,  67,  68;  payments  under 
the  principal  not-returnable  and 
principal  returnable  plans,  Caisse 
Nationale  des  Retraites,  (Table) 
329;  premiums,  69,  205,  208,  210, 
212,  323,  324,  327,  328,  333,  334, 
336;  premiums  required  to  pur- 
chase an  annuity  of  150  francs, 


FRANCE  (continued) 

beginning  at  age  of  50,  in  PreVoy- 
ance  Commerciale,  (Table)  339; 
Prevoyance  Commerciale,  339,  340; 
ratio  of  premium  receipts  to  pay- 
rolls, in  insurance  companies  and 
societies,  (Table)  69;  reserves  re- 
quired, 67;  sickness  insurance  in, 
201-214;  standing  of  stock  com- 
panies insuring  employers  in,  19; 
state  supervision  of  insurance  com- 
panies, 69;  statistics  of  miners' 
sickness  societies,  (Table)  212,  213; 
survivorship  annuities  in,  289; 
unemployment  insurance  in,  384- 
385.  See  also  Appendices  I  and  II, 
422-431 

Accident  insurance   and   workmen's 
compensation  in,  64-73.     See  also 
under  general  topics. 
Invalidity  insurance  in,  285,  322-340 
Old  age  insurance  in,  301,  302,  305, 
308,  310,  322-340;   beneficiaries  of 
compulsory,  335;    benefits  granted 
to  parents  of  more  than  three  chil- 
dren, 331 ;  benefits  under,  323,  324, 

325,  S2?,  328,  329,  330,  331,  333, 
334,  335,  336,  337,  338;    compul- 
sory, 322,  332,  333,  334,  335;  com- 
pulsory system  of,  for  miners  and 
seamen,  322,  332,  333;    contribu- 
tions to,  332,  333, 334, 335;  cost  to 
state  of,  increasing,  310;   disburse- 
ment of  funds,  331,  332;    govern- 
ment's special  provision  for,  327, 
329,  330,  331;  legislation  affecting, 
322,  324,  327,  329,  330,  331,  332, 
333,334,335;  premiums,  324,  327, 
328,  333,  334,  336;     principal  re- 
turnable and  non-returnable,  323, 
327,     328,    329,    332;     voluntary 
agencies  for,  322,  323,  324,  325, 

326,  327,  328,  329,  330,  331,  332, 

333,  334 
Pensions  to  widows  and  orphans  of 

seamen,  333 

Sickness  insurance  in,  201-214 
Sickness  insurance  societies  in:  admin- 
istration cost  of.  207;  "approved," 
202,  203,  204,  206,  207;  "author- 
ized," 201,  202;  Senefits  under, 
208,  209,  210,  211;  campaign 
against  infant  mortality,  213,  214; 
character  and  value  of  benefits 
paid  by  the  mutual,  (Table)  208; 
children  enrolled  in,  202,  203,  205; 
"communal,"  209,  210;  contribu- 


455 


INDEX 


FRANCE 

Sickness  insurance  societies  in  (con- 
tinued) 

tions  to,  202,  205,  207,  212;    de- 
velopment of,  201;     "free,"  203, 

204,  206,  207;    honorary  members 
of,  205 ;  institutions  for  social  wel- 
fare, 213,  214;  legislation  affecting, 
201,  202,  203,  205,  210,  211 ;   min- 
ers and  seamen  protected  by,  211, 
212;      monthly  dues  charged  by 
communal,  (Table)  210;  premiums, 

205,  208,  210,  212;    "recognized," 
202;      state   supervision   of,    203; 
statistics  of  miners',  (Table)  212, 
213;    trade  unions,  210,  211 

Unemployment  insurance  in:  384- 
385;  benefits  under,  385;  contri- 
butions, 384,  385;  in  trade  unions, 
385;  legislation  affecting,  384, 
385 

FRANKENKASSEN,  Switzerland,  217, 
218 

FRATERNAL  SOCIETIES:  funeral  and 
burial  insurance  in,  164, 165 

FREE  AND  APPROVED  SOCIETIES:  in 
France,  203,  204,  206,  207;  in- 
come of.  France,  (Table)  206;  in- 
crease of,  France,  (Table)  204; 
membership  of,  France,  (Table) 
204;  number  of  beneficiaries  of, 
France,  (Table)  206,  207 

FREMTIDEN,  Denmark,  190,  191,  192; 
disbursements  of,  (Table)  191 

FRIENDLY  SOCIETIES:  administration 
cost  of,  165;  in  Belgium,  coopera- 
tion between,  and  state  depart- 
ments, 321;  in  Geinrar.y,  229;  in 
Great  Britain,  19,  20,  44;  in  Great 
Britain,  number  of  registered,  180; 
in  Great  Britain,  object  to  Work- 
men's Compensation  Act,  46;  pro- 
vide for  invalidity  insurance,  281; 
provide  for  old  age  pensions,  296, 
297;  unemployment  insurance  in, 
368 

FRIENDLY  SOCIETIES  ACT:  in  Great 
Britain,  regulates  premiums,  281 

FUNDS:  disbursement  of,  France,  331, 
332;  disbursement  of,  Germany, 
284,  356,  358;  division  of,  Ger- 
many, 352;  investment  of,  Ger- 
many, 284,  285,  352,  360 


FUNERAL  AND  BURIAL  INSURANCE,  160 
-165;  in  fraternal  societies,  164, 
165;  in  sickness  societies,  162,  163; 
premiums,  160,  161;  societies, 
functions  of,  160;  societies,  sol- 
vency of,  161 

In  Denmark:  benefits  under,  192; 
complete  separation  of,  from  sick- 
ness insurance  required,  162,  163 

In  Germany:  in  private  societies 
limited,  165 

In  Great  Britain,  163,  164;  benefits 
under,  164;  Manchester  Unity  of 
Odd  Fellows,  164 

In  Holland:  benefits  under,  197;  in- 
vestigation of  societies,  198;  legal 
character  of  societies,  198;  legisla- 
tion affecting,  198,  199;  number  of 
societies,  196,  197;  premiums,  197; 
solvency  of  societies,  197, 198 
FYLGIA,  Sweden,  53,  54 


GEMEINDEKRANKENKASSEN,  Germany, 
231,  233,  236, 238 

GENOSSENSCHAFTSKRANKENKASSEN, 
Austria,  265 

GERMANY:  accident  insurance  and  work- 
men's compensation  in,  89-115; 
administration  cost  of  employers' 
mutual  associations,  in;  amount 
of  reserve  fund  of  mutual  associa- 
tions of  employers,  (Table)  113; 
amount  of  reserve  funds  on  Decem- 
ber 3 1 ,  under  old  age  and  invalidity 
insurance,  (Table)  360;  annual  pen- 
sions and  government  bonuses  by 
wage-class  under  invalidity  insur- 
ance, (Table)  350;  annual  pensions 
and  government  bonuses  by  wage- 
class  under  old  age  insurance, 
(Table)  349;  arbitration,  97,  351, 
352,  357,  358;  attitude  of  employers 
toward  compulsory  insurance,  141 ; 
attitude  of  trade  associations  to- 
ward compulsory  insurance,  141 ; 
attitude  of  workingmen  toward 
compulsory  insurance,  142;  Aus- 
fiihrungsbehorden,  96;  average 
amounts  expended  for  compensa- 
tion per  person  injured  and  mem- 
ber treated,  (Table)  108;  average 
pensions  paid  for  old  age,  sick- 
ness, and  invalidity,  (Table)  355; 
beneficial  results  of  insurance 
legislation,  100,  101;  Betriebs- 


456 


INDEX 


GERMANY  (continued) 

krankenkassen,  233,  236,  238; 
Building  Trade  Accident  Insurance 
Law,  99;  capitalization  of  annui- 
ties not  required,  112;  cause  of  in- 
crease of  sickness,  241,  242;  causes 
of  accidents  for  which  compensa- 
tion was  first  paid,  in  1907,  (Table) 
106;  Central  Commission  of  the 
Sickness  Societies  of  Berlin,  261; 
classification  of  employers  in  mu- 
tual associations,  30;  compensa- 
tion classified  by  kind  of  expendi- 
ture, (Table)  107;  compensation 
for  injuries  based  on  wages,  10; 
compensation  for  work-accidents, 
92,96,97,98,99,107,108;  compre- 
hensive system  of  insurance  in,  136; 
compulsory  insurance,  90,  93,  95, 
141,  399,  400,  401,  402,  403;  con- 
tributions, 249,  250,  257,  348;  con- 
tributions and  benefits  of  working- 
men's  insurance  in  Germany, 
1907,  Appendix  II,  430;  dis- 
bursements for  old  age  and  inva- 
lidity insurance,  (Table)  358;  em- 
ployers' liability,  3,  91;  employers' 
mutual  associations,  28,  29,  30,  31, 
32,  95,  96,  99,  100,  101,  in,  112, 
113,  114,  115,  135,  136;  expendi- 
tures for  benefits  for  old  age,  sick- 
ness, and  invalidity,  (Table)  356; 
expenses  of  management  in  detail 
under  old  age  and  invalidity  in- 
surance, (Table)  359;  Gemeinde- 
krankenkassen,  231,  233,  236,  238; 
German  Workingmen's  Society, 
230;  Hansa,  in  Hamburg,  261, 
262;  Hilfskassen,  233,  236;  Im- 
perial Insurance  Office,  97,  98,  109, 
no;  increase  in  number  of  work- 
accidents,  102,  104;  increased 
cost  to  employers  in  mutual  asso- 
ciations, 112;  industrial  conditions 
in,  89,  90;  Innungskrankenkassen, 
228,233,238;  insurance  in  govern- 
ment departments,  33,  40;  insur- 
ance in  private  companies,  18;  in- 
surance legislation  in,  91,  92,  93,  94, 
95,  228,  229,  230,  231,  232,  235, 
346,  347;  invalidity  and  old  age 
insurance  in,  346-360;  items  of 
management  expense  of  mutual 
associations  of  employers,  (Table) 
in;  joint  weekly  contributions 
for  old  age  and  invalidity  insurance 
by  wage  class,  (Table)  348;  Knapp- 


GERMANY  (continued) 

schaftskassen,  228,  229,  233,  236; 
Landesrechtlichehilfskassen,  233 ; 
legislation  affecting  work-accidents, 
91,92;  litigation  of  damage  claims, 
16;  Local  Society  of  Dresden,  260; 
Local  Society  of  Leipsic,  256,  257, 
258,  259,  260;  Marine  Insurance 
Law,  99,  100;  membership  in  em- 
ployers' mutual  associations  com- 
pulsory, 112;  message  of  Emperor 
William  to  the  Reichstag,  94; 
movement  toward  complete  and 
connected  system  of  insurance, 

393,  396,  397,  398,  399,  4°i, 
402;  number  and  value  of  con- 
tributions returned  under  old  age 
and  invalidity  insurance,  (Table) 
357;  number  of  accidents  and 
rate  per  1000  insured  in  indus- 
trial mutual  associations,  (Table) 
104;  number  of  accidents  in  agri- 
culture and  forestry  and  ratio 
per  1000  insured,  (Table)  106; 
number  of  associations,  establish- 
ments, state  executive  boards  and 
persons  insured  against  accident, 
(Table)  101;  number  of  em- 
ployers' mutual  associations,  100, 
101;  number  of  insurance  agencies 
and  of  persons  insured  against  old 
age  and  invalidity,  (Table)  353; 
number  of  pensions  and  number 
paid  for  first  time  for  old  age,  sick- 
ness and  invalidity,  (Table)  353; 
number  of  pensions  and  of  contri- 
butions returned,  and  number,  per 
cent  and  disposition  of  appeals  by 
courts  of  arbitration  under  old  age 
and  invalidity  insurance,  (Table) 
257;  number  of  workmen  insured, 
100;  number,  per  cent  and  dispo- 
sition of  appeals  from  courts  of 
arbitration  to  the  Imperial  Insur- 
ance Office,  (Table)  109;  num- 
ber, per  cent  and  disposition  of 
awards  appealed  to  courts  of  arbi- 
tration, (Table)  109;  occupational 
diseases  classed  with  accidents,  115; 
occupations  protected  by  compul- 
sory insurance,  93,  95,  98,  99,  100; 
operation  of  compulsory  insurance, 
95,  96,  108,  no;  operation  of  em- 
ployers' liability  law,  93;  opera- 
tion of  employers'  mutual  asso- 
ciations in  chemical  industries,  113, 
114,  115;  Ortskrankenkassen,  233, 


457 


INDEX 


GERMANY  (continued) 

236,    238;      prevention    of    acci- 
dents,   98,    no,    in,    115,    138, 
139,  143,  242,  355,  356;   proposed 
contributions  for  old  age  and  in- 
validity insurance  in  reform  pro- 
ject,  (Table)   414;    protection  of 
agricultural  laborers,   96,   98,   99; 
ratio  of  accidents  per  1000  full-time 
workers  in  22  classes  of  occupations, 
(Table)  105;  receipts  and  disburse- 
ments of  the  Local  Society  of  Leip- 
sic,  (Table)  260;   receipts  in  detail 
under  old  age  and  invalidity  in- 
surance, (Table)  359;    receipts  of 
mutual  associations  of  employers, 
(Table)    112;    reform  project  in,  i 
406-413;  Reichs-Versicherungamt, 
97,   98;    sickness   and  death   rec-  I 
ords  compiled  by  government,  239,   j 
240,    241;    sickness   insurance   as  ! 
preventive  of  occupational  diseases,  ] 
242;    sickness  insurance,  effectual  i 
operation  of,  235;    sickness  insur- 
ance in,  227-262;  standing  of  stock   j 
companies  insuring  employers,  18;   j 
state    supervision    of    employers'   ! 
mutual  associations,  96;  statistics 
of    the    unemployment    fund    in   i 
Cologne,    (Table)    391;     statistics   j 
relative    to    work-accidents,    102;   i 
summary     of    accident,    sickness 
and    invalidity   and    old   age   in- 
surance    statistics,     (Table)     91; 
Tiefbau-Berufsgenossenschaft,   99;  | 
total    number    of    accidents    and 
rate  per  1000  insured,  (Table)  103; 
total  number  of  appeals  decided 
by  the  Imperial  Insurance  Office 
under  old  age  and  invalidity  insur- 
ance, (Table)  358;  weekly  contribu- 
tions and  sick  and  funeral  benefits 
for  various  rates  of  wages,  Local 
Society  of  Leipsic,    (Table)    258; 
work-accident  statistics  compared 
with  Austria,  125,  126,  127;  work- 
men  unprotected   by   compulsory 
sickness  insurance,  235.     See  also 
Appendices  I  and  II,  422-431 

Accident  insurance  and  workmen's 
compensation  in,  89-115.  See  also 
under  general  topics. 

Funeral  and  burial  insurance  in:  in 
private  societies,  limited,  165 

Invalidity  insurance  in,  136;  adminis- 
tration cost  of,  358,  359;  adminis- 
tration of,  349,  351 ;  amount  of  re- 


GERMANY 

Invalidity  insurance  in  (continued) 
serve     funds    on     December    31, 
(Table)  360;    annual  pensions  and 
government  bonuses  by  wage  class, 
(Table)  350;   arbitration,  351,  352, 

357,  358;   benefits  under,  283,  284, 
347,  348,  35°,  355;     compulsory, 
347;     contributions  to,  283,  348, 
349,  350,  359,  360;    contributions 
returnable,  350,  357;  cost  of  medi- 
cal  care,   355;      disbursement   of 
funds,  284,  356,  358;    division  of 
funds,  352;  expenditures  for  bene- 
fits, (Table)  356;  expenses  of  man- 
agement in  detail  under,  (Table) 
359;      investment  of   funds,    284, 
285,  352,  360;  joint  weekly  contri- 
butions for,  by  wage  class,  (Table) 
348;    labor  market  affects  number 
of  pensions,  354;  legislation  affect- 
ing, 346,  347;  number  and  value  of 
contributions     returned,     (Table) 
357;   number  of  insurance  agencies 
and  of  persons  insured,  (Table)  353 ; 
number  of  pensions   and   number 
paid  for  first  time,   (Table)   353; 
number  of  pensions  and  of  contri- 
butions returned,  and  number,  per 
cent  and  disposition  of  appeals  by 
courts  of  arbitration,  (Table)  357; 
number  of  pensions  granted,  354; 
pensions  paid,  (Table)  355;     per- 
sons exempt  from  compulsory,  347; 
preventive  and  restorative  move- 
ment, 355,  356;    proposed  contri- 
butions   for,    in    reform    project, 
(Table)    414;      receipts   in   detail 
under,  (Table)  359;     reserves  for, 
360;   simulation,  354;   state  super- 
vision. 352;    supervision  exercised 
through    Imperial   Insurance    De- 
partment, 349;     total  number  of 
appeals  and  number  and  disposi- 
tion of  these  decided  by  the  Im- 
perial    Insurance     Office,     under, 
(Table)  358;     under  earlier  laws, 
282;   when  pensions  under,  remain 
in  abeyance,  350 

Invalidity  and  Old  Age  Insurance  in, 

346-360 

Maternity  insurance  in,  166,  167,  246 
Old  age  insurance  in,  136,  302,  303, 

307,  308;   administration  cost  of, 

358,  359;    administration  of,  349, 
351;     amount  of  reserve  funds  on 
December  31,  (Table)  360;  annual 


458 


INDEX 


GERMANY 

Old  age  insurance  in  (continued) 
pensions  and  government  bonuses 
by  wage  class,  (Table)  349;  arbi- 
tration, 351,  352,  357,  358;  bene- 
fits under,  347,  348,  349,  355;  com- 
pulsory, 347;  contributions,  307, 
348,  349,  359,  360;  contributions 
returnable,  350,  357;  disburse- 
ments for,  (Table)  358;  disburse- 
ment of  funds,  356,  358;  division 
of  funds,  352;  expenditures  for 
benefits,  (Table)  356;  expenses  of 
management  in  detail,  (Table)  359; 
investment  of  funds,  352,  360; 
joint  weekly  contributions  for,  by 
wage  class,  (Table)  348;  legislation 
affecting,  346,  347;  number  and 
value  of  contributions  returned, 
(Table)  357;  number  of  insurance 
agencies  and  of  persons  insured, 
(Table)  353;  number  of  pensions 
and  number  paid  for  first  time, 
(Table)  353;  number  of  pensions 
and  of  contributions  returned,  and 
number,  per  cent  and  disposition 
of  appeals  by  courts  of  arbitration, 
(Table)  357;  number  of  pensions 
granted,  354;  pensions  paid,  (Ta- 
ble) 355;  persons  exempt  from 
compulsory,  347;  proposed  con- 
tributions for,  in  reform  project, 
(Table)  414;  receipts  in  detail, 
(Table)  359;  reserves  for,  360; 
state  supervision  of,  352;  super- 
vision of,  exercised  through  Im- 
perial Insurance  Office,  349;  total 
number  of  appeals  and  num- 
ber and  disposition  of  these  de- 
cided by  the  Imperial  Insurance 
Office,  (Table)  358;  when  pen- 
sions remain  in  abeyance,  350 

Pensions    to    widows   and    orphans: 
proposed  extension  of  compulsory 
insurance  to  cover,  293 
Sickness  insurance  in,  227-262 

Sickness  insurance  societies  in,  92,136 ; 
administration  cost  of,  251,  (Table) 
252, 253, 260, 262;  administration  of, 
158,252,254,256,262;  adjustment 
of  disputed  claims,  254;  average 
amount  of  death  benefits,  (Table) 
245;  average  annual  contribution 
per  member,  (Table)  250;  average 
cost  of  administration  per  member, 
(Table)  252;  average  cost  of  hos- 
pital service  per  member,  (Table) 


GERMANY 

Sickness  insurance  societies  in  (con- 
tinued) 

243;  average  number  of  cases  of 
sickness  per  100  members,  (Table) 
241;  average  number  of  members 
per  society,  (Table)  237;  average 
sick  benefits  per  member,  (Table) 
245;  benefits  under,  154,  234,  235, 
242,  243,  244,  245,  246,  247,  248, 
251,  257,  258,  259,  262;  benefits 
and  contributions,  (Table)  251; 
builders',  233;  communal,  230, 
231,  232,  233,  236,  238;  compul- 
sory, 228,  229,  230,  232,  235;  com- 
pulsory, compared  with  voluntary, 
236,  237;  contributions,  155,  234, 
249,  250,  251,  257;  decrease  in 
death  rate  in,  242;  development  of, 
227,  228,  229,  230,  231,  232,  256; 
effect  of  compulsory,  241,  242; 
effect  upon  efficiency  of  labor, 
158;  effect  upon  trade  unions,  158, 
159;  efficiency  of  large  versus 
small  companies,  238;  employer 
penalized  for  employing  workmen 
uninsured  in,  155,  234;  existing, 
utilized  in  connection  with  new 
scheme  of  social  insurance,  154; 
expenditures  for  benefits,  (Table) 
356;  factory,  233,  236,  238;  pri- 
vate friendly,  229;  guilds,  233,  238; 
in  Baden,  230;  in  Bavaria,  230;  in 
Brunswick,  230;  in  Dresden,  238; 
in  Hanover,  230;  in  Leipsic,  238; 
in  Prussia,  228;  in  Saxony,  230; 
in  Wiirtemberg,  230;  income 
and  disbursements  of  all,  (Table) 
253;  independent  state,  233;  leg- 
islation affecting,  228,  229,  230, 
231,  232,  235;  local,  233,  236, 
238;  membership  and  amount  of 
sick  benefits,  including  those  for 
women  before  and  after  confine- 
ment, (Table)  246;  membership 
of,  238,  239;  membership  in,  com- 
pulsory, 154,  155;  miners  pro- 
tected by,  229,  233,  236;  miners' 
trade  unions,  228,  229;  mutual, 
232;  number  insured  in  various, 
(Table)  237;  number  of ,  according 
to  size  of  membership,  (Table)  239; 
number  of  different  types  of, 
(Table)  236;  number  of  men  and 
women  in,  (Table)  239;  number  of 
pensions  and  number  paid  for  first 
time,  (Table)  353;  number  of  sol- 


459 


INDEX 


GERMANY 

Sickness  insurance  societies  in  (con- 
tinued) 

vent  and  insolvent,  (Table)  255; 
pensions  paid,  (Table)  355;  per 
cent  and  duration  of  sickness  and 
per  cent  of  deaths  in,  (Table)  240; 
percentage  of,  collecting  a  given 
percentage  of  wages,  (Table)  249; 
percentage  of  various  kinds  of 
benefits  paid,  (Table)  248;  re- 
serves in,  254,  255,  256,  260;  sick- 
ness rate,  compared  with  Austria, 
270;  solvency  of,  254,  255;  total 
and  average  cost  for  medical  treat- 
ment and  medicines,  (Table)  243; 
total  and  average  reserve  per  mem- 
ber, (Table)  255;  total  benefits  per 
member,  (Table)  248;  total  con- 
tributions of  members,  (Table)  250; 
total  cost  of  care  of  convalescents, 
(Table)  244;  total  cost  of  hospital 
service,  (Table)  243;  total  disabil- 
ity and  death  benefits  in,  (Table) 
247;  total  income  and  disburse- 
ments of,  (Table)  254;  total  sick 
benefits  paid,  (Table)  244;  types 
of,  232,  233,  236;  voluntary  mutual 
aid,  233,  236 

Unemployment  insurance  in,  388-391 ; 
administration  of,  388;  attitude  of 
Social  Democrats  toward,  391; 
benefits  under,  389,  390;  contribu- 
tions, 388,  389,  390;  in  Cologne, 
371,  372,  388,  390;  in  Leipsic,  390; 
in  Munich,  371,  390;  in  Strasburg, 
390;  in  trade  unions,  388,  390; 
municipal,  388;  statistics  of  the 
unemployment  fund  in  Cologne, 
(Table)  390 

GHENT:  unemployment  insurance  in, 
37i, 373,  384 

GOVERNMENT  COMPULSION  AND  SUPER- 
VISION: employers'  mutual  asso- 
ciations under,  more  successful, 
135, 136 

GOVERNMENT  DEPARTMENTS:  insur- 
ance of  employers  in,  33-41 

GREAT  BRITAIN  :  accident  insurance  and 
workmen's  compensation  in,  42- 
48;  adjustment  of  damage  claims, 
21 ;  administration  cost  of  insur- 
ance companies  in,  46;  affiliated 
orders,  176,  177,  178,  179,  180, 181; 
amounts  allowed  under  old  age 


GREAT  BRITAIN  (continued) 

pension  act,  (Table)  315;  Ancient 
Order  of  Foresters,  150,  182;  bene- 
fits furnished  by  trade  unions,  27, 
28;  common  law  liability  in,  44, 
46,  56;  compensation  for  injuries 
based  on  wages,  10;  compensation 
for  work-accidents,  43,  44;  contri- 
bution per  month  for  lowest  and 
highest  scale  of  benefits  in  Inde- 
pendent Order  of  Odd  Fellows, 
(Table)  179;  employers'  liability 
in,  3,  ii,  21,  42,  46;  employers' 
mutual  associations,  19,  26,  27,  28, 
29,  46;  employers  not  released 
from  liability  by  insurance,  44; 
establishment  funds,  26,  27,  28; 
Fatal  Accidents  Act,  44;  financial 
statement  of  the  National  Deposit 
Friendly  Society,  (Table)  176; 
friendly  societies  in,  19,  20,  44; 
Hearts  of  Oak,  148,  173;  insurance 
in  government  departments.  33, 
34;  insurance  in  private  com- 
panies, 19,  21,  22,  23;  insurance 
legislation  in,  42,  43,  44,  46,  47, 
169,  170,  313,  314;  insurance  not 
compulsory,  44,  171;  invalidity 
and  old  age  insurance  in,  313-315; 
legislation  affecting  workmen's 
compensation,  42,  43,  44,  46,  47; 
litigation  in,  21,  46;  Manchester 
Unity  of  Independent  Order  of 
Odd  Fellows,  150,  164,  178,  179, 
1 80;  movement  toward  complete 
and  connected  system  of  insurance, 
393,  394,  395,  398,  399;  National 
Deposit  Friendly  Society,  174,  175, 
176;  number  of  employes,  acci- 
dents and  diseases,  and  compensa- 
tion paid  in  certain  industries, 
(Table)  47;  objections  to  Work- 
men's Compensation  Act,  46;  oc- 
cupational diseases  classed  with 
accidents,  43;  occupations  pro- 
tected by  employers'  liability,  43; 
premiums  in,  regulated  by  Friendly 
Societies  Act,  281;  publicity  re- 
quired of  insurance  companies,  45, 
170;  rates  and  bene  Its  of  the  Law, 
Union  and  Crown  Insurance  Com- 
pany, (Table)  45;  Registrar  of 
Friendly  Societies,  19,  26;  reports 
required  from  employers'  liability 
insurance  companies,  33,  34;  sick- 
ness insurance  in,  169-183;  stand- 
ing of  stock  companies  insuring 


460 


INDEX 


GREAT  BRITAIN  (continued) 

employers,  19,  45;  statistics  of  the 
National  Deposit  Friendly  Society, 
(Table)  175;  summary  of  member- 
ship and  funds  of  registered 
friendly  societies  and  branches 
in  Ireland,  (Table)  182,  183; 
trade  unions  in,  demand  compul- 
sory insurance  in  government  de- 
partments, 48;  trade  unions  in, 
object  to  workmen's  compensation 
act,  46;  "wilful  act,"  21,  44; 
workmen's  associations  in,  44; 
Workmen's  Compensation  Act,  n, 
26,  27,  28,  44,  46.  See  also  Appen- 
dices I  and  II,  422-431 

Accident  insurance  and  workmen's 
compensation  in,  42-48.  See  also 
under  general  topics 

Funeral  and  burial  insurance  in,  163, 
164;  benefits  under,  164;  in  Man- 
chester Unity  of  Odd  Fellows,  164 

Old  agejinsurance  in,  300;  administra- 
tion of,  315;  amount  allowed  under 
act,  (Table)  315;  benefits  under, 
314,  315;  contributions  to,  314; 
cost  to  state  increasing,  310;  de- 
velopment of,  313,  314;  funds  for 
pensions  raised  by  general  taxation, 
315;  legislation  affecting ,  3 1 3 ,  3 1 4 ; 
on  non-contributing  basis,  314 

Pensions  to  widows  and  orphans: 
development  of  societies  insuring, 
287,  288,  290;  effect  of  remarriage 
on,  294;  valuation  and  registra- 
tion of  societies  insuring,  288 

Sickness  insurance  societies  in:  admin- 
istration costs,  180,  181;  affiliated, 
150;  annual  reports  required  from, 
181;  benefits  under,  170;  contri- 
butions to,  180,  181;  development 
of,  171,  172,  173;  legislation  affect- 
ing, 169,  170;  membership  of,  180, 
182;  number  of  registered  friendly, 
180;  publicity  required  of,  170; 
quinquennial  valuation  of ,  171, 181; 
registered  and  unregistered,  169, 
170,  171;  types  of,  171 

Unemployment  insurance  in.  378-3  79; 
"distress  work,"  378;  labor  situa- 
tion requiring,  378;  legislation 
affecting,  379;  proposed,  375,  376, 
378,  379;  "Unemployed  Workmen 
Act,"  379 

GREECE:  employers'  liability  in,  3 
GUARANTEE  FUND:   in  Belgium,  63 


461 


GUILD  sickness  insurance  societies  : 
in  Germany,  233,  238 

HANSA,  Germany,  261,  262 

HAZARDS:  classification  of  industries 
by,  in  Austria,  (Table)  119 

HEARTS  OF  OAK,  Great  Britain,  148 
173 

HILFSKASSEN,  Germany,  233,  236 

HOLLAND  :  accident  insurance  and  work- 
men's compensation,  57-61 ;  Alege- 
meen  Ziekenfonds  voor  Amster- 
dam, 195,  196;  capitalization  of 
annuities,  58;  .compensation  for 
injuries  based  on  wages,  10;  com- 
pensation for  work-accidents  in, 

58,  59;      compulsory     insurance 
general,  58;  employers'  liability  in, 
3,  57;   employers'  mutual  associa- 
tions, 20,  28,  29;  insurance  in  gov- 
ernment departments,  20,  36,  37, 

59,  60;   insurance  in  private  com- 
panies, 19, 20, 22, 24, 25;  insurance 
legislation  in,  58, 194,195,319,320; 
invalidity  and  old  age  insurance  in, 
319-320;    legislation  affecting  re- 
serves,  37;     legislation    affecting 
workmen's  compensation,  58;  num- 
ber of  accidents,cost  of  management 
and    amount  of  indemnities  paid, 
(Table)    60;     number   of   insured 
establishments  in,  61;    number  of 
workmen  insured,  61;  occupations 
protected  by  compulsory  insurance 
58;   premiums,  193,  194,  195,  196; 
prevention  of  work-accidents,  61; 
publicity    required    of    insurance 
companies,  36;  Rijksveszekerings- 
bank,   59;    sickness  insurance  in, 
193-199;   sickness  provided  for  by 
poor  laws,  195;   standing  of  stock 
companies  insuring  employers,  19; 
Ziekenzorg     Handwerkers     Vrien- 
denkring,    196.     See   also   Appen- 
dices I  and  II,  422-431 

Accident  insurance  and  workmen's 
compensation  in,  57-61.  See  also 
under  general  topics 

Funeral  and  burial  insurance  in:  bene- 
fits under,  197;  legislation  affecting, 
198,199;  premiums,  197;  societies, 
investigation  of,  198;  societies,  le- 
gal character  of ,  198;  societies,  num- 
ber of,  196, 197;  societies,  solvency 
of,  197,  198 


INDEX 


HOLLAND  (continued) 
Invalidity  insurance  in:  no  govern- 
ment provision  for,  319 
Old  age  insurance  in:  in  Amsterdam, 
308;     legislation    affecting,    319, 
320;  no  government  provision  for, 

3i9 

Sickness  insurance  societies:  admin- 
istration cost  of,  197;  benefits  un- 
der, 193,  194,  195,  196;  develop- 
ment of,  193;  legislation  affecting, 
194,195;  no  government  provision 
for,  193;  premiums,  193,  194,  195, 
196;  solvency  of,  194;  types  of, 

193.  194 

Unemployment  insurance  in,  382-383; 
administration  of,  383;  benefits 
under,  383;  contributions,  383; 
in  Amsterdam,  371,  372,  382,  383; 
in  Arnheim,  383 ;  in  Hiversum,  383 ; 
in  the  Hague,  373,  383;  in  trade 
unions,  382,  383;  in  Utrecht,  373, 
383,  legislation  affecting,  383; 
premiums,  383 


IMPERIAL  INSURANCE  OFFICE.  Ger- 
many, 97,  98,  109,  no;  number, 
per  cent  and  disposition  of  appeals 
from  courts  of  arbitration  to, 
(Table)  109;  supervision  of  old  age 
and  invalidity  insurance  exercised 
through,  349;  total  number  of 
appeals  and  number  and  disposi- 
tion of  these  decided  by  the,  under 
old  age  and  invalidity  insurance, 
(Table)  358 

INCOME:  and  amount  expended  per 
member  in  sickness  insurance  so- 
cieties, Austria,  (Table)  272;  and 
disbursements  of  all  sickness  in- 
surance societies,  Germany,  (Table) 
253;  and  disbursements  of  sick- 
ness insurance  societies,  Germany, 
(Table)  274;  and  expenditures  of 
sickness  insurance  societies,  Swit- 
zerland, (Table)  219;  of  free  and 
approved  societies,  France,  (Table) 
206;  premiums,  interest  and  other 
income  of  the  seven  territorial  as- 
sociations, Austria,  (Table)  130; 
total,  and  disbursements  of  sick- 
ness insurance  societies,  Germany, 
(Table)  254 

INDEMNITIES:  amount  of,  paid,  Holland, 
(Table)  60 


INDEPENDENT  ORDER  OF  ODD  FELLOWS: 
in  Great  Britain,  contribution  per 
month  for  lowest  and  highest  scale 
of  benefits  in,  (Table)  179 

"INDEPENDENT  STATE"  sickness  in- 
surance societies,  Germany,  233 

INDUSTRIAL  ACCIDENTS  .  See  A  ccidents  ; 
Work-accidents 

INDUSTRIAL  CONDITIONS:  in  Germany, 
89, 90 

INFANT  MORTALITY:  campaign  of  sick- 
ness insurance  societies  in  France 
against,  213,  214 

INNUNGSKRANKENKASSEN,  Germany, 
228,  233,  238 

INSURANCE:  against  industrial  acci- 
dents, 3-144, 43  2;  against  invalidity 
or  total  and  permanent  disability, 
281-286;  against  sickness  and 
death,  146-277;  against  work-ac- 
cidents, equalizes  burden  of  dam- 
ages, 3;  distribution  of,  among 
companies  in  France,  (Table)  68; 
economy  of  various  systems,  135; 
efficiency  of  various  systems,  135; 
encouragement  given  by  various 
systems  to  more  comprehensive 
protection,  135;  for  workingmen, 
tendency  toward  a  complete  and 
connected  system  of,  393-403;  in 
Austria,  voluntary,  121;  in  Bel- 
gium, not  compulsory,  62;  in 
Denmark,  movement  toward  com- 
plete and  connected  system,  395; 
in  Denmark,  not  compulsory,  55; 
in  France,  movement  toward  com- 
plete and  connected  system,  394, 
395)  396;  in  France,  not  compul- 
sory, 64,  68;  in  Germany,  compre- 
hensive system  of,  136;  in  Ger- 
many, movement  toward  complete 
and  connected  system,  393,  396, 
397,  398,  399,  40i,  402;  in  Great 
Britain,  movement  toward  com- 
plete and  connected  system,  393, 
394,  395,  398, 399;  in  Great  Britain, 
not  compulsory,  44;  in  Sweden,  not 
compulsory,  54;  legislation,  bene- 
ficial results  of,  in  Germany,  100, 
101;  of  pensions  to  widows  and 
orphans,  287-295;  reserves  neces- 
sary when  voluntary,  161,  162; 
summary  of  workingmen's  in  Euro- 
pean countries,  Appendix  I,  422- 
429 


462 


INDEX 


INSURANCE  COMPANIES:  in  Belgium, 
22,  62,  63;  in  Denmark,  22,  23; 
in  France,  68;  publicity  required 
of,  in  Great  Britain,  45,  170;  pub- 
licity required  of,  in  Holland,  36; 
reserves  required,  23,  24;  state 
supervision  of,  in  France,  69;  state 
supervision  of,  in  Italy,  41 ;  state 
supervision  of,  in  Sweden,  38,  39 

INSURANCE  IN  GOVERNMENT  DEPART- 
MENTS, 33-41;  in  Austria,  33,  40; 
in  Belgium  34,  35,  36,  63;  in  Den- 
mark, 34;  in  France,  34;  in  Ger- 
many, 33,  40;  in  Great  Britain, 
33,  34;  in  Holland,  20,  36,  37,  59, 
60;  in  Italy,  82;  in  Norway,  40, 
41,  48,  49,  50;  in  Sweden,  20,  23, 
38,  39,  52;  trade  unions  in  Great 
Britain  demand  compulsory,  48 

INSURANCE  OF  EMPLOYERS  IN  MUTUAL 
ASSOCIATIONS,  26-32 

INSURANCE  OF  EMPLOYERS  IN  PRIVATE 
COMPANIES,  14-25;  in  Austria,  18; 
in  Belgium,  19,  21,  22,  24,  25;  in 
Denmark,  19,  22,  24;  in  Finland, 
19;  in  France,  19,  21,  22,  25;  in 
Germany,  18;  in  Great  Britain, 

19,  21,    22,    23;    in  Holland,    19, 

20,  22,   24,   25;    in  Italy,  19,  20; 
in  Norway,  18,  22;  in  Russia,  19; 
in  Sweden,  19,  20,  23,  24,  25;   in 
Switzerland,  19,  20,  22 

INTERNATIONAL  CONGRESS  ON  WORK- 
INGMEN'S  INSURANCE  at  Rome, 
401,  402,  403 

INVALIDITY:  of  work-accident  victims, 
workmen's  compensation  act  pro- 
vides for,  282 

INVALIDITY  AND  OLD  AGE  INSURANCE, 
281-364;  in  various  countries,  313- 
364;  in  Austria,  361-364;  in  Bel- 
gium, 320-322;  in  Denmark,  318- 
319;  in  France,  322-340;  in 
Germany,  346-360;  in  Great 
Britain,  313-315;  in  Holland,  319- 
320;  in  Italy,  343-346;  in  Norway, 
315-317;  in  Sweden,  317-318;  in 
Switzerland,  340-343;  summary  of, 
in  European  countries,  Appendix  I, 
428-429 

INVALIDITY  INSURANCE:  desirable  as 
matter  of  public  policy,  136;  es- 
tablishment funds  provide  for,  282; 
friendly  societies  provide  for,  281; 
in  marine  service,  282;  in  mining 


INVALIDITY  INSURANCE  (continued) 

industries,  282;  in  street  railways, 
282;  in  the  Krupp  works,  282; 
reserves  for,  281;  simulation,  283, 
284 

In  Austria:  administration  cost  of, 
363;  administration  of,  363;  bene- 
fits under,  283,  361,  363;  contribu- 
tions, 362,  363;  employers'  inde- 
pendent organizations  for,  364; 
law  applies  only  to  miners  and 
office  employes,  361;  legislation 
affecting,  361,  362;  premiums,  127, 
128,  129,  363;  reserves  for,  362; 
Social  Democrats  demand  one  law 
for,  applicable  to  all,  364;  wage 
classification  of,  (Table)  362 

In  Belgium:  benefits  under,  320,  321; 
contributions,  321,322;  legislation 
affecting,  320,  321 

In  Denmark,  285;  commission  study- 
ing, 319;  voluntary,  recommended 
by  commission,  286 

In  France,  285 

In  Germany,  136;  administration 
cost  of,  358,  359;  administration 
of,  349,  351;  amount  of  reserve 
funds  on  December  31,  (Table)  360; 
annual  pensions  and  government 
bonuses  by  wage  class,  (Table)  350; 
arbitration,  351,  352,  357,  358; 
benefits  under,  283,  284,  347,  348, 
35°,  3555  compulsory,  347;  con- 
tributions, 283,  348,  349,  350,  359, 
360;  contributions  returnable,  350, 
357;  cost  of  medical  care,  355;  dis- 
bursements for,  (Table)  358;  dis- 
bursement of  funds,  284,  356,  358; 
division  of  funds  ,352;  expenditures 
for  benefits,  (Table)  356;  expenses 
of  management  in  detail,  (Table) 
359;  investment  of  funds,  352, 
360;  joint  weekly  contributions  for, 
by  wage  class,  (Table)  348;  labor 
market  affects  number  of  pensions 
354;  legislation  affecting,  346,  347; 
number  and  value  of  contributions 
returned,  (Table)  357;  number  of 
insurance  agencies  and  of  persons 
insured,  (Table)  353;  number  of 
pensions  and  number  paid  for  first 
time,  (Table)  353;  number  of  pen- 
sions and  of  contributions  returned, 
and  number,  per  cent  and  disposi- 
tion of  appeals  by  courts  of  arbi- 
tration, (Table)  357;  number  of 
pensions  granted,  354;  pensions 


463 


INDEX 


INVALIDITY  INSURANCE 
In  Germany  (continued) 
paid,  (Table)  355;  persons  exempt 
from  compulsory,  347;  preven- 
tive and  restorative  movement, 
355)  SS^;  proposed  contributions 
for,  in  reform  project,  (Table)  414; 
receipts  in  detail,  (Table)  359; 
reserves  for,  360;  simulation,  354; 
state  supervision  of,  352;  super- 
vision exercised  through  Imperial 
Insurance  Office,  349;  total  num- 
ber of  appeals  and  number  and 
disposition  of  these  decided  by  the 
Imperial  Insurance  Office,  (Table) 
358;  under  earlier  laws,  282;  when 
pensions  remain  in  abeyance  in, 

35° 

In  Holland:  no  government  provision 
for,  319 

In  Italy :  administration  of,  344;  bene- 
fits   under,    344,  345;     contribu-   j 
tions  to,  343,  345,  346;   legislation   | 
affecting,  343,344,  345;  premiums, 
343;    voluntary,  343 

In  Norway :  compulsory,  recommend- 
ed by  commission,  285,  286 

In  Sweden,  285,  286;  legislation 
affecting,  317;  schemes  for,  under 
consideration,  317,  318 

INVALIDITY  INSURANCE  STATISTICS: 
summary  of  accident,  sickness,  old 
age  and,  in  Germany,  (Table) 
Qi 

INVALIDITY  OR  TOTAL  AND  PERMANENT 
DISABILITY:  insurance  against, 
281-286 

ITALY:  accident  insurance  and  work- 
men's compensation,  81-89;  acci- 
dent statistics,  (Table)  88;  admin- 
istration cost  of  National  Accident 
Insurance  Fund  in,  82;  Arbitration 
Board,  87;  Associazone  degli  in- 
dustriali  d'ltalia  per  prevenire  gli 
infortuni  de  lavoro,  89;  Cassa 
nazionale  di  assicurazione  per  gli 
infortuni  degli  operai  sul  lavoro,  82 ; 
compensation  for  work-accidents 
in,  83,  84,  85,  86;  compensation 
granted  seamen,  86;  compulsory 
insurance,  41,  83,  84,  85;  compul- 
sory insurance  of  seamen  in,  86, 
87;  compulsory  insurance  of  sul- 
phur miners,  86,  87;  employers', 
liability  in,  3;  employers'  mutual 
associations,  19,  20,  28,  29,  85,  86; 


464 


ITALY  (continued) 

forms  of  insurance  under  National 
Accident  Insurance  Fund,  82,  83; 
insurance  in  government  depart- 
ments, 82;  insurance  in  private 
companies,  19,  20;  insurance  legis- 
lation in,  81,  82,  83,  84,  343,  344, 
345;  invalidity  and  old  age  insur- 
ance in,  343-346;  legislation  affect- 
ing work-accidents,  86;  member- 
ship and  benefits  of  unemployment 
department  of  Umanitaria,  (Table) 
388;  National  Accident  Insurance 
Fund,  82,  84,  85;  National  Old 
Age  and  Invalidity  Annuity  Fund, 
343,344,345;  number  insured  and 
value  of  annuity  fund,  (Table)  346; 
number  of  mutual  aid  societies, 
membership  and  funds,  (Table) 
225;  occupations  protected  by 
compulsory  insurance  in,  84;  pre- 
miums in,  224,  343;  prevention  of 
work-accidents,  87,  88,  137;  sick- 
ness insurance  in,  224-227;  special 
compulsory  insurance  societies  in, 
86,  87;  state  supervision  of  insur- 
ance companies,  41;  statistics  of 
national  accident  fund,  (Table) 
88.  See  also  Appendices  I  and  II, 
422-431 

Accident  insurance  and  workmen's 
compensation  in,  81-89.  See  also 
under  general  topics 

Invalidity  insurance  in:  administra- 
tion of,  344;  benefits  under,  344, 
345;  contributions,  343,  345,  346; 
legislation  affecting,  343,  344,  345; 
premiums,  343;  voluntary,  343 

Old  age  insurance  in:  administration 
of,  344;  benefits  under,  344,  345; 
contributions,  343,  345,  346;  legis- 
lation affecting,  343,  344,  345; 
premiums,  343;  voluntary,  343 

Sickness  insurance  in,  2  24-2  2  7 ;  welfare 
of  state  requires  compulsory,  227 

Sickness  insurance  societies  in:  admin- 
istration cost  of,  226;  benefits  under, 
225,  226;  contributions,  224;  de- 
velopment of,  224;  inadequacy  of, 
226;  per  cent  of  expenditures  in, 
(Table)  226;  premiums,  224;  pub- 
licity required  of,  224;  registered, 
receive  special  benefits,  224;  regis- 
tration of,  voluntary,  224;  re- 
serves, 224;  solvency  of,  224,  225 

Unemployment  insurance  in,  387- 
388;  benefits  under,  387,  388;  con- 


INDEX 


ITALY 

Unemployment   insurance    in    (con- 
tinued) 

tributions,  387;  in  Milan,  387;  in 
trade  unions,  387;  "La  Societa 
Umanitaria,"  387,  388;  member- 
ship and  benefits  of  unemploy- 
ment department  of  Umanitaria, 
(Table)  388 


KNAPPSCHAFTSKASSEN,  Germany,  228, 

229,  233,  236 
KRUPP  WORKS:     establishment  funds, 

28;  invalidity  insurance  in,  282 


L'ABEILLE,  France,  69 

L'UNION  DU  COMMERCE,  France,  208, 
209 

LA  FRANCE  PREVOYANTE,  337,  338;  an- 
nuity secured  by  annual  payment 
of  12  francs  in,  (Table)  338 

LA  SOCIETA  UMANiTARfA,  Italy,  388, 
389 

LABOR:  effect  of  employer's  mutual 
associations  on  efficiency  of,  139, 
140,  141;  effect  of  sickness  insur- 
ance societies  in  Germany  on  effi- 
ciency of,  158 

LABOR  MARKET:  affects  number  of  in- 
validity pensions  in  Germany,  354 

LANDESRECHTLICHEHILFSKASSEN,  Ger- 
many, 233 

LAW,  UNION  AND  CROWN  INSURANCE 
COMPANY:  rates  and  benefits  of  the, 
in  Great  Britain,  (Table)  45 

LEGISLATION:      affecting     agricultural 
laborers  in  France,  72;     affecting 
funeral    and    burial   insurance    in 
Holland,   198,   199;     affecting  re-   | 
serves  in  Holland,  37;     affecting 
seamen  in  France,  72;     affecting 
unemployment  insurance,  in  Bel- 
gium,  384,   in  Denmark,  380,   in 
France,  384,  385,  in  Holland,  383, 
in  Norway,   380,   in   Switzerland, 
385,  386;   affecting  work-accidents 
in  Germany,  91,  92,  in  Italy,  86;   ; 
affecting  workmen's  compensation,   '• 
in  Belgium,  61,  in  Denmark,  55,   ; 
in  France,  64,  67,  72,  73,  in  Great 
Britain,  42,  43,  44,  46,  47,  in  Hol- 
land, 58,  in  Sweden,  51,  in  Switzer-   • 
30  F  465 


LEGISLATION  (continued) 

land,  74;  insurance,  in  Austria, 
115,  116,  117,  121,  262,  263,  264, 
265,  361,  362,  in  Belgium,  61,  199, 

200,  320,  321,  in  Denmark,  54,  55, 
56,  189,  in  France,  64,  67,  72,  73, 

201,  202,  203,  205,  210,  211,  322, 
324,  327,  329,  33°,  33i,  332,  333, 
334,  335,  in  Germany,  91,  92,  93, 
94,  95,  228,  229,  230,  231,  232,  235, 
346,  347,  in  Great  Britain,  42,  43, 
44,  46,  47,  169,  170,  313,  314,  in 
Holland,  58,   194,   195,  319,  320, 
in  Italy,  81,  82,  83,  84,  343,  344, 
345,  in  Norway,  48,  183.  184,  in 
Sweden,  51,  187,  317,  in  Switzer- 
land, 73,  74,  75,  76,  77,  78,  79,  80, 

8l,  144,  214,  215,  2l6,  221,  222,  223 

LEHRLINGSKRANKENKASSEN,  Austria, 
265 

LES     MUTUALITES    MATERNELLES, 

France.  214 

LITIGATION:  in  Austria,  132;  in  Ger- 
many, 16;  in  Great  Britain,  21,  46; 
in  France,  21;  in  Denmark,  23 

LOCAL  SOCIETY  OF  DRESDEN,  260 

LOCAL  SOCIETY  OF  LEIPSIC,  256,  257, 
258,  259,  260 

"LOCAL"  SICKNESS  INSURANCE  SOCIE- 
TIES: in  Germany,  233,  236,  238 


MANAGEMENT  EXPENSE:  items  of,  of 
mutual  associations  of  employers, 
Germany,  (Table)  in;  ratio  of, 
to  contributions  and  indemnities, 
Austria,  (Table)  130.  See  also 
Administration  cost 

MANCHESTER  UNITY  OF  INDEPENDENT 
ORDER  OF  ODD  FELLOWS,  Great 
Britain,  150,  164,  178,  179,  180 

MANLY,  H.  W.:  "Valuation  of  Staff 
Pension  Funds,"  by,  298,  299,  300 

MARINE  INSURANCE  LAW  :  in  Germany, 
99,  100 

MARINE  SERVICE  :  invalidity  insurance 
in,  282 

MATERNITY  INSURANCE,  166-168;  cov- 
ers unmarried  women,  167;  in 
Austria,  166, 167;  in  Germany,  166, 
167,  (Table)  246;  uncommon  in  the 
United  States,  168  * 


INDEX 


MINERS:  protection  of,  in  Austria,  263, 
265,  361,  in  Belgium,  63,  322,  in 
France,  211,  212,  322,  332,  333, 
in  Germany,  229,  233,  236;  sulphur, 
protected  by  compulsory  insurance 
in  Italy,  86,  87 

MINERS'  TRADE  UNION  sickness  insur- 
ance societies:  in  Germany,  228, 
229 

MINES  AND  QUARRIES:  fatalities  and 
injuries  in,  France,  (Table)  71 

MINING  INDUSTRIES:  invalidity  insur- 
ance in,  282 

MUNICIPAL  UNEMPLOYMENT  INSUR- 
ANCE: in  Germany,  389 

MUTUAL  AID  SOCIETIES:  in  Italy,  num- 
ber of,  membership  and  funds, 
(Table)  225 

MUTUAL  ASSOCIATIONS:  insurance  of 
employers  in,  26-32 

MUTUAL  COMPANIES:  prevention  of 
work-accidents  by,  137,  138,  139, 
143.  J44 

MUTUAL  SICKNESS  INSURANCE  SOCIE- 
TIES: in  Germany,  232 


NATIONAL  ACCIDENT  INSURANCE  FUND, 
Italy,  82,  84,  85;  statistics  of, 
(Table)  88 

NATIONAL  DEPOSIT  FRIENDLY  SOCIETY: 
in  Great  Britain,  174,  175,  176;  fi- 
nancial statement  of,  (Table)  176; 
statistics  of,  (Table)  175 

NATIONAL  GUARANTEE  FUND  :  in  France, 
69;  growth  of,  (Table)  70 

NATIONAL  OLD  AGE  AND  INVALIDITY 
ANNUITY  FUND:  Italy,  343,  344, 
345 

NEGLECT  OF  FELLOW  WORKMEN:  em- 
ployers' liability  cancelled  by,  6,  7 

NEGLIGENCE:  employers'  liability  in 
France  cancelled  by  victim's  gross 
negligence,  u;  law  of,  governing 
employers'  liability,  5,  n,  17; 
theory  of,  in  employers'  liability, 
4-8 

NEW  ZEALAND  :  employers'  liability  in, 
3;  old  age  insurance  in,  308 

NORDEN,  Sweden,  53,  54 

NON-WAGE  EARNERS:  old  age  pensions, 
308 


NORWAY:  accident  insurance  and  work- 
men's compensation  in,  48-50;  An- 
meldelige  Syge-Kasse,  186,  187; 
classes  and  rates  under  sickness  in- 
surance law ,  (Table)  1 85 ;  compensa- 
tion for  work-accidents,  48, 49 ;  com- 
pulsory insurance  in,  48,  49;  em- 
ployers' liability  in,  3;  Enkekasse, 
316;  estimated  number  of  persons 
covered  by  sickness  insurance  law 
in,  (Table)  185;  insurance  in  gov- 
ernment departments,  40,  41,  48, 

49,  50;    insurance  in  private  com- 
panies, 18,  22;     insurance  legisla- 
tion, 48,  183,  184;    invalidity  and 
old  age  insurance  in,  315-317;   net 
cost  of  insurance  under  sickness 
insurance  law,  (Table)  185;    occu- 
pations protected  by  compulsory 
insurance,  48;     premiums  in,  49, 

50,  185,  186;    prevention  of  work- 
accidents,  50,  138;    sickness  insur- 
ance in,  183-187;    sickness  insur- 
ance not  compulsory  for   certain 
citizens,  157;    Sigyn,  50;   standing 
of  stock  companies  insuring  em- 
ployers, 18,  50.     See  also  Appen- 
dices I  and  II,  422-431 

Accident  insurance  and  workmen's 
compensation  in,  48-50.  See  also 
under  general  topics 

Invalidity  insurance  in :  compulsory, 
recommended  by  commission,  285, 
286 

Old  age  insurance  in:  301;  for  city 
employes,  316;  report  of  com- 
mission, 315;  schemes  for,  under 
consideration,  305,  306,  315,  316; 
state  officials  protected  by,  316 

Sickness  insurance  in,  183-187;  com- 
pulsory, for  all  wage  earners,  157; 
compulsory,  for  city  employes,  316 

Sickness  insurance  societies  in:  ad- 
ministration cost  of,  185;  benefits 
under,  184;  contributions,  184, 
316;  legislation  affecting  183,  184; 
membership  of,  185;  occupations 
protected  by,  184;  premiums  in, 
185, 186 

Unemployment  insurance  in :  374, 375, 
379, 380;  in  trade  unions.  380;  legis- 
lation affecting,  380 


OBLIGATORY  INSURANCE.    See  Compul- 
sory insurance 


466 


INDEX 


OCCUPATIONAL  DISEASES:  movement 
for  prevention  of,  242,  269,  355, 
356;  classed  with  accidents,  in 
Germany,  115,  in  Great  Britain,  43 

OCCUPATIONAL  RISK  :  employe  not  paid 
for,  ii,  12,  13 

OCCUPATIONS  PROTECTED:  by  compul- 
sory insurance,  in  Austria,  116, 
in  Germany,  93,  95,  98,  99  100,  in 
Holland,  58,  in  Italy,  84,  in  Nor- 
way, 48;  by  employer's  liability, 
in  Denmark,  55,  in  Great  Britain, 
43,  in  Sweden,  51,  in  Switzerland, 
74;  by  sickness  insurance  societies, 
in  Austria,  263,  265,  in  France,  211, 
212,  in  Germany,  229,  233,  236, 
in  Norway,  184,  in  Switzerland, 
214,  218;  by  workmen's  compen- 
sation act,  in  Belgium,  61,  in 
France,  64,  67,  68 

OFFICE  EMPLOYES:  protection  of,  in 
Austria,  361 

OLD  AGE  ANNUITIES  AND  PENSIONS, 
296-312 

OLD  AGE  AND  INVALIDITY  INSURANCE, 
281-364;  in  various  countries,  313- 
364;  summary  of,  in  European 
countries,  Appendix  1, 428-429 

OLD  AGE  INSURANCE:  assessment  plan 
for  furnishing,  304;  attitude  of  | 
employers  toward,  307;  average 
premium  method  of  furnishing,  304; 
capitalized  value  method  of  fur- 
nishing, 304;  compulsory  basis  for 
furnishing,  304;  contributions,  300; 
desirable  as  matter  of  public  poli- 
cy, 136;  establishment  funds  pro- 
vide for,  297,  298,  299,  300; 
friendly  societies  provide  for,  296, 
297;  minimum  contribution  and 
compulsory  system  of  furnishing, 
304,  305,  312;  on  non-contributing 
basis,  310,  311;  reserves  for,  312; 
schemes  for,  under  consideration 
in  several  countries,  305;  statistics, 
summary  of  accident,  sickness,  in- 
validity and,  in  Germany,  (Table) 

91 

In  Austria:  administration  cost  of, 
363;  administration  of,  363;  bene- 
fits under,  361,  363;  contributions, 
362,  363;  employers'  independent 
organizations  for,  364;  law  applies 
only  to  miners  and  office  employes, 
361;  legislation  affecting,  361,  362; 


OLD  AGE  INSURANCE 

In  Austria  (continued) 
premiums,  363;  reserves  for,  362; 
schemes  for,  under  consideration, 
305 ;  Social  Democrats  demand  one 
law,  applicable  to  all,  364;  wage 
classification  of,  (Table)  362 

In  Belgium:  benefits  under,  320,  321; 
compulsory  system  for  miners,  322; 
contributions,  321,  322;  legislation 
affecting,  320,  321 

In  Denmark,  301,  310;  benefits 
under,  318;  contributions,  318; 
substitute  for  outdoor  relief,  309 

In  France,  301,  302,  305,  308,  310; 
beneficiaries  of  compulsory  system, 
335 ;  benefits  granted  to  parents  of 
more  than  three  children,  331 
benefits  under,  323,  324,  325,  327, 
328,  329,  330,  331,  333,  334,  335, 
336,  337,  338;  classes  of  agencies 
for  insuring  pensions,  335,  336; 
compulsory,  322,  332,  333,  334, 
335;  compulsory  system  for  min- 
ers and  seamen,  322,  332,  333;  con- 
tributions, 332,  333,  334, 335;  cost 
to  state  of  pensions  increasing,  310; 
disbursements  of  funds,  331,  332; 
government's  special  provision  for, 
327,  329,  330,  331;  legislation 
affecting,  322,  324,  327,  329,  330, 
331,332,333,334,335;  premiums, 

324,  327,  328,  333,  334,  336;   prin- 
cipal returnable,  and  non-return- 
able, 323,  327,  328,  329,  332;    vol- 
untary agencies  for,  322,  323,  324, 

325,  326,  327,  328,  329,  330,  331, 

332,  333, 334 

In  Germany,  136,  302,  303,  307, 
308;  administration  cost  of,  358, 
359;  administration  of,  349,  351; 
amount  of  reserve  funds  on  Decem- 
ber 31  under,  (Table)  360;  annual 
pensions  and  government  bonuses 
by  wage  class  under,  (Table)  349; 
arbitration,  351,352,357,358;  av- 
erage pensions  paid,  (Table)  355; 
benefits  under,  347,  348,  349,  355; 
compulsory,  347;  contributions, 
307,  348,  349,  359,  360;  contribu- 
tions returnable,  350,  357;  dis- 
bursements for,  (Table)  358;  dis- 
bursement of  funds,  356,  358;  di- 
vision of  funds,  352;  expenditures 
for  benefits,  (Table)  356;  expenses 
of  management  in  detail,  (Table) 
359;  investment  of  funds,  352,  360; 


467 


INDEX 


OLD  AGE  INSURANCE 

In  Germany  (continued) 
joint  weekly  contributions  for,  by 
wage  class,  (Table)  348;  legislation 
affecting,  346,  347;  number  and 
value  of  contributions  returned 
under,  (Table)  357;  number  of  in- 
surance agencies  and  of  persons  in- 
sured, (Table)  353;  number  of 
pensions  and  number  paid  for  first 
time,  (Table)  353;  number  of  pen- 
sions and  of  contributions  returned, 
and  number,  per  cent  and  disposi- 
tion of  appeals  by  courts  of  arbi- 
tration under,  (Table)  357;  num- 
ber of  pensions  granted,  354;  per- 
sons exempt  from  compulsory,  347; 
proposed  contributions  for,  in  re- 
form project,  (Table)  414;  re- 
ceipts in  detail,  (Table)  359;  re- 
serves for,  360;  state  supervision 
of,  352;  supervision  exercised 
through  Imperial  Insurance 
Office  349;  total  number  of 
appeals  and  number  and  disposi- 
tion of  these  decided  by  the 
Imperial  Insurance  Office  (Table) 
358;  when  pensions  remain  in  abey- 
ance, 350 

In  Great  Britain,  300,  308,  310;  ad- 
ministration of,  315;  amounts  of 
pensions  allowed  under  act,  (Table) 
315;  benefits  under,  314,  315;  con- 
tributions, 314;  cost  to  state  in- 
creasing, 310;  development  of,  313, 
314;  funds  for  pensions  raised  by 
general  taxation,  315;  legislation 
affecting,  313,  314;  on  non-con- 
tributing basis,  314 

In  Holland:  in  Amsterdam,  308; 
legislation  affecting,  319,  320;  no 
government  provision  for,  319 

In  Italy:  administration  of,  344; 
benefits  under,  344,  345 ;  contribu- 
tions, 343,  345,  346;  legislation 
affecting,  343,344,  345;  premiums, 
343;  voluntary,  343 

In  New  Zealand,  308 

In  Norway,  301;  for  city  employes, 
316;  for  state  officials,  316;  report 
of  commission  on ,  3 1 5 ;  schemes  for, 
under  consideration,  305,  306,  315, 

316 

In  Sweden:  legislation  affecting,  317; 
no  provision  for,  317;  schemes  for, 
under  consideration,  305,  306,  317, 


OLD  AGE  INSURANCE  (continued) 

In  Switzerland:  benefits  under,  340, 
341,  342;  contributions,  340,  341; 
furnished  by  Canton  Neuenburg, 
340;  furnished  by  Canton  Waadt, 
341,  342;  no  federal  provision  for, 
340;  premiums,  340,  341,  342; 
premiums  returnable  and  non-re- 
turnable, 341,  342;  schemes  for, 
under  consideration  by  other  can- 
tons, 343 

OLD  AGE  PENSIONS:  disadvantageous 
effects  of,  309,  310;  for  non-wage- 
earners,  308;  not  a  system  of 
workingmen's  insurance,  309;  sub- 
stitute for  old  age  relief  systems, 
308,309,311,312 

ORPHANS.  See  Pensions  to  widows  and 
orphans 

ORTSKRANKENKASSEN,  Germany,  233, 
236,  238.  See  also)  Local  societies 
in  Germany 


PATRIA:  accident  department  of  the,  in 
Austria,  116 

PENSIONS:  amount  of  burial  benefits 
and,  paid  in  Austria,  (Table)  127; 
number  and  annual  value  of  cur- 
rent permanent,  in  Austria,  (Table) 
127 

To  widows  and  orphans:  contribu- 
tions in  societies  insuring,  291,  292, 
293;  development  of  societies  in- 
suring in  Great  Britain,  287,  288, 
290;  effect  on  remarriage  in  Great 
Britain,  294;  hazards  under  vol- 
untary system,  294,  295;  in  Austria, 
127,  128,  129;  insurance  of,  287- 
295;  of  French  seamen,  333;  pro- 
posed extension  of  compulsory  in- 
surance in  Germany  to  cover,  293 ; 
not  paid  when  income  exceeds  cer- 
tain amount,  293;  reserves  in 
societies  insuring,  291,  292,  293; 
societies  insuring,  in  the  United 
States,  288;  special  payment  at 
time  of  remarriage,  294;  under 
compulsory  system,  290,  291,  292, 
293;  valuation  and  registration  of 
societies  insuring  in  Great  Britain, 
288.  See  also  Survivorship  annuities 

PENSIONS  TO  WIDOWS  OF  CLERGY,  289, 
290 


468 


INDEX 


PENSIONERS:  number  of,  average  an- 
nual pension  and  per  cent  of  wages, 
in  Austria,  (Table)  128 

PHYSICIANS:  choice  of,  in  France,  7.1 

PREMIUMS:  annuities  granted  at  differ- 
ent ages  for  an  annual  premium  of 
one  franc  in  Caisse  Nationale  des 
Retraites,  (Table)  328;  annuity 
secured  by  annual  payment  of  12 
francs  in  La  France  Prevoyante, 
(Table)  338;  classes  and,  under 
sickness  insurance  law,  Norway 
(Table)  185;  (contribution)  per 
month  for  lowest  and  highest  scale 
of  benefits  in  Independent  Order 
of  Odd  Fellows,  Great  Britain, 
(Table)  179;  Friendly  Societies 
Act  regulates,  Great  Britain,  281; 
funeral  and  burial  insurance,  160, 
161;  funeral  and  burial  insurance, 
Holland,  197;  in  Law,  Union  and 
Crown  Insurance  Company,  Great 
Britain,  (Table)  45;  insurance,  in 
Austria,  118,  119,  120,  121,  130, 
131,  363,  in  France,  69,  205,  208, 
210,  212,  323,  324,  327,  328,  333, 
334,  336,  in  Holland,  193,  194,  195, 
196,  in  Italy,  224,  343,  in  Norway, 
49,  50,  185,  186,  in  Switzerland, 
340,  341,  342;  interest,  and  other 
income  of  the  seven  territorial 
associations,  Austria,  (Table)  130; 
prevention  of  work-accidents  re- 
flected in,  137;  ratio  of  receipts  to 
payrolls  in  insurance  companies 
and  societies,  France,  (Table)  69; 
required  to  purchase  an  annuity  of 
150  francs,  beginning  at  age  50  in 
Prevoyance  Commerciale,  (Table) 
339;  of  unemployment  insurance 
in  Denmark,  382;  of  unemploy- 
ment insurance  in  Holland,  383 

PREMIUMS  NON-RETURNABLE:  old  age 
insurance,  in  Switzerland,  341,  342. 
See  also,  Contributions  non-return- 
able; Principal  non-returnable 

PREMIUMS  RETURNABLE:  old  age  insur- 
ance, in  Switzerland,  341,  342. 
See  also  Contributions  returnable; 
Principal  returnable 

PREVENTION  OF  DISEASE:  in  Austria, 
269 

PREVENTION  OF  OCCUPATIONAL  DIS- 
EASES: movement  for,  242,  269, 
355,356 


PREVENTION  OF  WORK-ACCIDENTS:  by 
Federation  of  Sickness  Insurance 
Societies  in  Vienna,  143,  144;  by 
mutual  companies,  137;  by  state 
insurance  department,  138;  by 
stock  companies,  136,  137;  in 
Austria,  121,  139,  143,  144,  269,  in 
Denmark,  137,  in  Germany,  98, 
no,  in,  115,  138,  139,  143,  242, 
355,  356,  in  Holland,  61,  in  Italy, 
87,  88,  137,  in  Norway,  50,  138, 
in  Sweden,  138;  reflected  in  pre- 
miums, 137 

PREVOYANCE  COMMERCIALS,  France, 
339,  340;  premiums  required  to 
purchase  an  annuity  of  150  francs, 
beginning  at  age  50  in,  (Table)  339 

PRINCIPAL  NON-RETURNABLE:  old  age 
insurance,  in  France,  323,  327,  328, 
329,  332;  payments  under,  plan  in 
Caisse  Nationale  des  Retraites, 
(Table)  329.  See  also  Contributions 
non-returnable;  Premiums  non- 
returnable 

PRINCIPAL  RETURNABLE:  old  age  insur- 
ance, in  France,  323,  327,  328,  329, 
332;  payments  under,  plan  in 
Caisse  Nationale  des  Retraites, 
(Table)  329.  See  also,  Contribu- 
tions returnable;  Premiums  re- 
turnable 

PRIVATE  COMPANIES:  insurance  in,  does 
not  release  employers  from  liabil- 
ity, 3,  19,  20,  52;  insurance  of  em- 
ployes in, 14-25 

PRIVATE  FRIENDLY  Sickness  Insurance 
Societies:  in  Austria,  265,  269 

"PROVIDENT  SOCIETIES,"  by  Sir  E.  W. 
Brabrook,  181 

PUBLIC  POLICY:  employers'  liability  in- 
surance contrary  to,  14,  15,  16,  17; 
sickness,  invalidity  and  old  age  in- 
surance desirable  as  matter  of,  136; 
various  systems  of  insurance  of  em- 
ployers from  the  standpoint  of, 
133-144 

PUBLICITY:  required  of  insurance  com- 
panies in  Great  Britain,  45,  170,  in 
Holland,  36;  required  of  sickness 
insurance  societies  in  Italy,  224. 
See  also  Reports 


QUEBEC:   employers'  liability  in,  3 


469 


INDEX 


RAILWAY  EMPLOYES:  protection  of,  in 
Austria,  121,  in  Switzerland,  214, 
218 

RATES.     See  Contributions;   Premiums 

RATES  AND  BENEFITS:  of  the  Law, 
Union  and  Crown  Insurance  Com- 
pany in  Great  Britain,  (Table)  45 

RECEIPTS  :  and  disbursements  of  unem- 
ployment funds  for  eight  months 
ending  March  31,  1908,  Denmark, 
(Table)  382;  in  detail  under  old 
age  and  invalidity  insurance  in 
Germany,  (Table)  359;  of  employ- 
ers' mutual  associations  in  Ger- 
many, (Table)  112;  of  Local  So- 
ciety of  Leipsic,  (Table)  260 

"  RECOGNIZED"  Sickness  Insurance  So- 
cieties: in  France,  202 

REFORM  PROJECT  IN  AUSTRIA,  414-420 

REFORM  PROJECT  IN  GERMANY,  406-413 

REGISTERED:  mutual  sickness  insur- 
ance societies  in  Austria,  265;  sick- 
ness insurance  societies  in  Italy  re- 
ceive special  benefits,  224 

REGISTERED  AND  UNREGISTERED 
sickness  insurance  societies:  in  Bel- 
gium, 200;  in  Great  Britain,  169, 
170,  171 

REGISTERED  FRIENDLY  SOCIETIES  and 
branches  in  Great  Britain  and  Ire- 
land :  summary  of  membership  and 
funds  of,  (Table)  182,  183 

REGISTRAR  OF  FRIENDLY  SOCIETIES,  19, 
26 

REGISTRATION:  of  sickness  insurance 
societies  in  Italy  voluntary,  224 

REICHS-VERSICHERUNGSAMT,  Germany, 
97,98 

REINSURANCE  SCHEME:  in  Denmark, 
163 

REPORTS:  annual,  required  from  sick- 
ness insurance  societies  in  Great 
Britain,  181;  required  from  em- 
ployers' liability  insurance  com- 
panies in  Great  Britain,  33,  34 

RESERVES:  amount  of,  of  employers' 
mutual  associations,  Germany, 
(Table)  113;  amount  of ,  on  Decem- 
ber 31,  under  old  age  and  invalid- 
ity insurance,  Germany,  (Table) 
360;  carried  by  employers'  mutual 
associations,  24,  29,  30,  31,  32, 
in  Germany,  112,  113,  115;  for  in- 


RESERVES  (continued) 

validity  insurance,  281,  in  Austria 
362,  in  Germany,  360;  for  old  age 
insurance,  312,  in  Austria,  362, 
in  Germany,  360;  in  affiliated  sick- 
ness insurance  societies,  149;  in 
establishment  societies,  153,  154; 
in  sickness  insurance  societies,  148, 
in  Austria,  275,  276,  in  Germany, 
254,  (Table)  255,  256,  260,  in  Italy, 
224;  in  trade  unions,  151;  in  so- 
cieties insuring  pensions  to  widows 
and  orphans,  291,  292,  293;  legis- 
lation affecting,  in  Holland,  37; 
necessary  when  insurance  is  volun- 
tary, 161, 162;  number  and  amount 
of  payments  and  amount  of,  in  the 
Caisse  Nationale  des  Retraites, 
(Table)  324;  required,  in  Austria, 
121,  129,  131,  in  Belgium,  24,  in 
Denmark,  24,  in  France,  67,  in  in- 
surance companies,  23,  24,  in  Swe- 
den, 24 

RIJKSVESZEKERINGSBANK,  Holland,  59 
RUSSIA:  employers' liability  in,  3;  em- 
ployers'  mutual   associations,    19; 
insurance  of  employers  in  private 
companies  in,  19 


ST.  GALL:  unemployment  insurance  in 
386 

SEAMEN:  legislation  affecting,  72;  pro- 
tection of,  in  Denmark,  56,  in 
France,  72,  73,  211,  212,  322,  332, 
333,  in  Italy,  86,  87 

SEE-BERUFSGENOSSENSCHAFT,  Ger- 
many, 99 

SERVICE  PENSIONS:  to  employes  of 
European  governments,  315 

SETTLEMENTS  UNDER  EMPLOYERS'  LIA- 
BILITY: conditions  attending,  8, 
14,  15,  16, 17, 18 

SICILY.      See  Italy 

SICKNESS:  in  Germany,  cause  of  in- 
crease of,  241,  242;  in  Holland, 
provided  for  by  poor  laws,  195 

SICKNESS  AND  DEATH,  Insurance 
against,  145-277;  records  com- 
piled by  German  government,  239, 
240,  241 

SICKNESS  INSURANCE,  147-159;  classes 
and  rates  under,  in  Norway, 
(Table)  185;  compulsory  systems 


470 


INDEX 


SICKNESS  INSURANCE  (continued) 

of,  superior  to  voluntary  systems, 
157;  conditions  surrounding,  in 
various  countries,  155,  156;  desir- 
able as  matter  of  public  policy,  136; 
estimated  number  of  persons  cov- 
ered by,  Norway,  (Table)  185,  in 
Austria,  262-277,  in  Belgium,  199- 
201,  in  Denmark,  189-192,  in 
France,  201-214,  in  Germany, 
227-262,  in  Great  Britain,  169- 
183,  in  Holland,  193-199,  in  Italy, 
224-227,  in  Norway,  157,  183- 
187,  316,  in  Sweden,  187-189,  in 
Switzerland,  214-223,  in  various 
countries,  169-277;  net  cost  of  in- 
surance under,  Norway  (Table)  185 ; 
not  generally  compulsory,  155; 
statistics,  summary  of  accident, 
invalidity,  old  age,  and,  in  Ger- 
many, (Table)  91;  summary  of,  in 
European  countries,  Appendix  I, 
426-427;  unfavorable  conditions 
surrounding,  on  a  voluntary  basis, 
156,  157 

SICKNESS  INSURANCE  SOCIETIES:  ad- 
vantages and  disadvantages  of 
affiliated,  149;  advantages  of  cen- 
tralized, 157,  158;  affiliated  or 
federated,  148, 149;  benefits  under, 
148;  federation  of,  in  Vienna,  143, 
144;  funeral  and  burial  insurance 
in  connection  with,  162,  163;  re- 
serves in,  148;  reserves  of  affil- 
iated, 149;  trade  unions  practi- 
cally affiliated,  150,  151.  See  also 
Types  of  Sickness  Insurance  Socie- 
ties; Establishment  Funds 
In  Austria:  appeals  from  courts  of 
arbitration  in,  (Table)  277;  ap- 
prentices, 265;  arbitration,  267, 
276,  277;  average  benefits  per  day 
and  per  case  of  sickness  and  per 
death,  (Table)  273;  average  con- 
tribution and  average  benefit  per 
member  in,  (Table)  274;  benefits 
under,  265,266,  272,  273;  benefits 
under,  compared  with  Germany, 
272,  273;  building  trades,  265; 
cases  and  days  of  sickness  and 
death  rate  in,  (Tables)  270,  271; 
contributions,  263,  264,  266,  274, 
275;  development  of ,  262,  263,  264; 
district,  265,  268;  employer  penal- 
ized for  employing  uninsured  work- 
men, 266,  267;  factory,  265,  268, 
270;  financial  condition  of ,  (Table) 


SICKNESS  INSURANCE  SOCIETIES 

In  Austria  (continued) 
275;  financial  condition  of ,  in  per- 
centages, (Table)  276;  income  and 
disbursements  of,  (Table)  274; 
legislation  affecting,  262,  263,  264, 
265;  miners,  263,  265;  number  and 
membership  of,  (Table)  267,  268; 
number  of,  (Table)  266;  per  cent 
of  sexes  in,  (Table)  267;  private 
friendly,  265,  269;  ratio  of  various 
benefits  to  total  benefits,  (Table) 
273;  ratio  of  various  items  of  ex- 
penditure to  total  expenditure,  and 
income  and  amount  expended  per 
member,  (Table)  272;  registered 
mutual,  265;  reserves,  275,  276; 
sickness  rate  in,  compared  with 
Germany,  270;  solvency  of,  130, 
JS1)  27S>  276;  total  benefits  and 
other  expenditures,  (Table)  271; 
total  number  of  cases  and  days  of 
sickness  and  deaths,  (Table)  269; 
trade-guilds,  265;  trade  union,  264; 
types  of,  265 

In  Belgium:  benefits  under,  200;  con- 
tributions, 200;  development  of, 
199;  legislation  affecting,  199,  200; 
privileges  granted  certain,  199; 
registered  and  unregistered,  200 

In  Denmark:  administration  cost  of, 
191;  benefits  under,  189,190,  191; 
contributions,  189;  legislation  af- 
fecting, 189;  membership  of,  189; 
solvency  of,  190;  state  supervision 
of,  190 

In  France:  administration  cost  of, 
207;  "approved,"  202,  203,  204, 
206,  207;  "authorized,"  201,  202; 
benefits  under,  208,  209,  210,  211; 
character  and  value  of  benefits 
paid  by  the  mutual,  (Table)  208; 
children  enrolled  in,  202,  203,  205; 
communal,  209,  210;  campaign 
against  infant  mortality,  213,  214; 
contributions  to,  202,  205,  207, 
212;  development  of,  201;  for 
miners,  211,  212;  for  seamen,  211, 
212;  free,  203,  204,  206,  207;  hon- 
orary members  of,  205;  institu- 
tions for  social  welfare,  213,  214; 
legislation  affecting,  201,  202,  203, 
205,  210,  21 1 ;  monthly  dues 
charged  by  communal,  (Table)  210; 
premiums,  205,  208,  210,  212; 
"recognized,"  202;  state  super- 
vision of,  203;  statistics  of  miners', 


471 


INDEX 


SICKNESS  INSURANCE  SOCIETIES 

In  France  (continued} 
(Table)   212,  213;     trade  unions, 
210,  211 

In  Germany,  92,  136;  administration 
cost  of,  251,  252,  253,  260, 262;  ad- 
ministration of,  158,  252,  254,  256, 
262;  adjustment  of  disputed  claims, 
254;  average  amount  of  death  bene- 
fits, (Table)  245;  average  annual 
contributions  per  member,  (Table) 
250;  average  cost  of  hospital  ser- 
vice per  member,  (Table)  243;  av- 
erage number  of  cases  of  sickness 
per  100  members,  (Table)  241;  av- 
erage number  of  members  per  so- 
ciety, (Table)  237;  average  sick 
benefits  per  member,  (Table)  245 ; 
benefits  and  contributions,  (Table) 
251;  benefits  under,  154,  234,  235, 
242,  243,  244,  245,  246,  247,  248, 
251,  257,  258,  259,  262;  builders', 
233;  communal,  230,  231,  232,  233, 
236,  238;  contributions,  155,  234, 
249,  250,  251,  257;  cost  of  admin- 
istration, (Table)  252;  decrease  in 
death  rate,  242;  development  of, 
227,  228,  229,  230,  231,  232,  256; 
effect  upon  efficiency  of  labor,  158; 
effect  upon  trade  unions,  158,  159; 
efficiency  of  large  versus  small 
companies,  238;  existing,  utilized 
in  connection  with  new  scheme  of 
social  insurance,  154;  expenditures 
for  benefits,  (Table)  356;  factory, 
233 >  236,  238;  friendly  societies, 
229;  guilds,  233,  238;  in  Baden; 
230;  in  Bavaria,  230;  in  Brunswick, 
230;  in  Dresden,  238;  in  Han- 
over, 230;  in  Leipsic,  238;  in 
Prussia,  228;  in  Saxony,  230;  in 
Wiirtemberg,  230;  income  and  j 
disbursements  of  all,  (Table)  253;  j 
independent  state,  233 ;  legislation  i 
affecting,  228,  229,  230,  231,  232, 
235;  local,  233,  236,  238;  member- 
ship and  amount  of  sick  benefits,  j 
including  those  for  women  before 
and  after  confinement,  (Table)  246; 
membership  in,  compulsory,  154, 
155;  membership  of,  238,  239; 
miners'  aid  societies,  229,  233,  236; 
miners'  trade  unions,  228,  229;  mu- 
tual, 232;  number  insured  in  ' 
various,  (Table)  237;  number  of, 
according  to  size  of  membership,  i 
(Table)  239;  number  of  different 


SICKNESS  INSURANCE  SOCIETIES 
In  Germany  (continued) 
types,  (Table)  236;  number  of 
men  and  women  in,  (Table)  239; 
number  of  pensions  and  number 
paid  for  first  time,  (Table)  353; 
number  of  solvent  and  insolvent, 
(Table)  255;  pensions  paid,  (Table) 
355!  per  cent  and  duration  of  sick- 
ness and  per  cent  of  deaths,  (Table) 
240;  percentage  of,  collecting  a 
given  percentage  of  wages,  (Table) 
249;  percentage  of  various  kinds 
of  benefits  paid,  (Table)  248;  re- 
serves, 254,  255,  256,  260;  sick- 
ness rate  in,  compared  with  Aus- 
tria, 270;  solvency  of,  254,  255; 
total  and  average  cost  for  medical 
treatment  and  medicines,  (Table) 
243 ;  total  and  average  reserve  per 
member,  (Table)  255;  total  bene- 
fits per  member,  (Table)  248;  total 
contributions  of  members,  (Table) 
250;  total  cost  of  care  of  convales- 
cents, (Table)  244;  total  cost  of 
hospital  service,  (Table)  243;  total 
disability  and  death  benefits, 
(Table)  247;  total  income  and 
disbursements,  (Table)  254;  total 
sick  benefits  paid,  (Table)  244; 
types  of,  232,  233,  236;  voluntary, 
compared  with  compulsory,  236, 
237;  voluntary  mutual  aid,  233, 
236 

In  Great  Britain:  administration  cost 
of,  180,181;  affiliated,  150;  annual 
reports  required  from,  181;  bene- 
fits under,  170;  contributions,  180, 
181;  development  of,  171, 172, 173; 
legislation  affecting,  169,  170; 
membership  of,  180,  182;  num- 
ber of  registered  friendly,  180;  pub- 
licity required  of,  170;  quinquen- 
nial valuation  of,  171,  181;  regis- 
tered and  unregistered,  169,  170, 
171;  types  of,  171 

In  Holland:  administration  cost  of, 
197;  benefits  under,  193,  194,195, 
196;  development  of,  193;  legisla- 
tion affecting,  194,  195;  no  govern- 
ment pro  vision  for.  193;  premiums, 
193, 194, 195,196;  solvency  of,  194; 
types  of,  193,  194 

In  Italy:  administration  cost  of,  226; 
benefits  under,  225,  226;  contribu- 
tions, 224;  development  of,  224; 
inadequacy  of,  226;  per  cent  of  ex- 


472 


INDEX 


SICKNESS  INSURANCE  SOCIETIES 
In  Italy  (continued) 
penditures,  (Table)  226;  premiums, 
224;     publicity  required  of,   224; 
registration    of,    voluntary,     224; 
registered,  receive  special  benefits, 
224;     reserves,  224;     solvency  of, 
224, 225 

In  Norway:  administration  cost  of, 
185;  benefits  under,  184;  contri- 
butions, 184,  316;  legislation 
affecting,  183, 184;  membership  of, 
185;  occupations  protected  by,  184; 
premiums,  185,  1 86;  voluntary,  for 
certain  citizens,  157 
In  Sweden:  administration  cost  of, 
188;  benefits  under,  188;  certain, 
exempt  from  stamp  duty,  187;  con- 
tributions, 187;  legislation  affect- 
ing, 187;  membership  of,  187;  sol- 
vency of,  1 88;  state  supervision  of , 
187 

In  Switzerland,  77,  78;  administra- 
tion cost  of,  220;  benefits  under, 
217,  220,  221;  children  enrolled  in, 
217;  contributions  to,  223;  devel- 
opment of,  216,  217;  existing  vol- 
untary, chief  factor  in  government 
scheme,  223;  for  railway  and 
steamboat  employes,  214,  218; 
growth  of  communal  and  industrial, 
(Table)  219;  in  Geneva,  223;  in- 
come and  expenditures  of,  (Table) 
219;  legislation  affecting,  214,  215, 
216,  221,  222,  223;  number  and 
per  cent  of,  and  per  cent  of  their 
membership  by  kind  of  benefit, 
(Table)  217;  number  and  per  cent 
of  compulsory  and  voluntary,  and 
of  their  membership,  (Table)  218; 
progress  of,  221;  solvency  of, 
218 

SIGYN,  Norway,  50 

SIMULATION:  in  Germany,  354;  under 
invalidity  insurance,  283,  284; 
under  Workmen's  Compensation 
Act,  174 

SOCIETY  or  AUSTRIAN  INDUSTRIAL 
WORKERS  FOR  ACCIDENT  INSUR- 
ANCE, Austria,  116 

SOLVENCY:  of  employers'  mutual  as- 
sociations, 29;  of  funeral  and  burial 
insurance  societies,  in  Holland,  197, 
198;  of  sickness  insurance  socie- 
ties, in  Austria,  130,  131,  275,  276, 
in  Denmark,  190,  in  Germany,  254, 


I  SOLVENCY  (continued) 

(Table)  255,  in  Holland,  194,  in 
Italy,  224,  225,  in  Sweden,  188,  in 
Switzerland,  218 

i  SPAIN:  employers'  liability  in,  3 
|  STATE  ANNUITY  FUND:     in  Belgium, 
number  and  amount  of  deposits  and 
amount  of  annuities    in,    (Table) 
322 

STATE  COMPETITION:  interferes  with 
operation  of  employers'  liability  in- 
surance companies,  215 

STATE  DEPARTMENTS:  employers'  mu- 
tual associations  in  competition 
with,  29 

STATE  II*SURANCE:  releases  employers 
from  liability,  3-20;  discussion  of, 
33-4I- 

STATE  INSURANCE  DEPARTMENTS:  pre- 
vention of  work-accidents  by, 
138 

STATE  OFFICIALS:  protected  by  old  age 
pensions  in  Norway,  316 

STATE  SUPERVISION  OF  INSURANCE:  in 
Denmark,  190;  in  France,  69,  203; 
in  Germany,  96,  352;  in  Italy,  41; 
in  Sweden,  38,  39,  187 

STATS  ANSTALT  FOR  LIVSFORSIKRING, 
Denmark,  34,  288 

STEAMBOAT  EMPLOYES:  protection  of, 
in  Switzerland,  214,  218 

STOCK  COMPANIES:  employers'  mutual 
associations  in  competition  with, 
29;  prevention  of  work-accidents 
by, 136, 137 

STOCK  COMPANIES  INSURING  EMPLOY- 
ERS: in  Austria,  18;  in  Belgium, 
19,  34,  35;  in  Europe,  18,  19;  in 
France,  19;  in  Germany,  18;  in 
Great  Britain,  19,  45;  in  Holland, 
19;  in  Norway,  18,  50;  in  Sweden, 
iQ 

STOTTERITZ:  convalescent  home,  259 

STREET  RAILWAYS:  invalidity  insur- 
ance in,  282 

SUBSIDIES.    See  Contributions 
SUBVENTIONS.    See  Contributions 

SURVIVORSHIP  ANNUITIES:  provided 
for  in  establishment  funds,  289,  290, 
291;  in  Belgium,  289;  inDenmark, 
288,  289,  301 ;  in  France,  289 


473 


INDEX 


SWEDEN:  accident  insurance  and  work-  ; 
men's    compensation    in,    51-54;  j 
Bore,  53;    compensation  for  work-   ! 
accidents,  51;    employers'  liability  ! 
m>  3>  51;    employers'  mutual  as-  ! 
sociations,  20,  28,  29,  53,  54;    em-  , 
ployers  not  released  from  liability  | 
by  insurance  in  private  companies,  ; 
52;  Forenigen  Enighet  Ger  Styrka,  : 
187, 188;  Fylgia,  53,  54;  insurance  ; 
in  government    departments,    20, 
23,38,39,52;  insurance  in  private   : 
companies,  19,  20,  23,  24,  25;    in- 
surance legislation,  51,  187,  317;   ! 
insurance  not  compulsory  in,  54;   ! 
invalidity  and  old  age  insurance  in, 
317-318;  legislation  affecting  work- 
men's compensation,  51;    Norden, 
53 »  545    occupations  protected  by  i 
employers'  liability,  51;     present 
values  of  annuities  under  law  of   ! 
1901,  (Table)  53;     prevention  of  ', 
work-accidents,  138;    reserves  re-  i 
quired,  24;    sickness  insurance  in,  i 
187-189;    standing  of  stock  com-  j 
panics    insuring    employers,     19;   | 
state  assessed  damages  in  certain 
cases,  23;    state  supervision  of  in-  j 
surance  companies,  38,  39 

Accident  insurance  and  workmen's 
compensation  in,  51-54.  See  also 
under  general  topics 

Invalidity  insurance  in,  285,  286;  leg- 
islation affecting,  317;  schemes  for, 
under  consideration,  317,318 

Old  age  insurance  in :  legislation  affect-   ; 
ing,  317;   no  government  provision 
for,  317;    schemes  for,  under  con-  j 
sideration,  305,  306,  317,  318 

Sickness  insurance  societies  in:  ad-  i 
ministration  cost  of,  188;  benefits  j 
under,  188;  certain,  exempt  from  ' 
stamp  duty,  187;  contributions, 
187;  legislation  affecting,  187;  ! 
membership  of,  187;  solvency  of,  ! 
188;  state  supervision  of,  187 

Unemployment  insurance  in,  380 
SWITZERLAND:  accident  insurance  and 
workmen's  compensation  in,  73- 
81 , 43  2 ;  administration  cost  of  sick- 
ness insurance  societies  in,  220; 
annuities  secured,  Canton  Waadt, 
(Table)  342;  Berufsgenossenschaf- 
ten,  76;  compensation  for  work- 
accidents,  74;  employers'  mutual 
associations,  19,  20,  28,  29;  esti- 
mated expenditure  by  government 


SWITZERLAND  (continued) 

on  account  of  insurance,  81;  es- 
timated total  and  distribution  of 
expenditure  for  accident  insurance, 
(Table)  81;  Krankenkassen,  217, 
218;  growth  of  communal  and  in- 
dustrial sickness  insurance  socie- 
ties, (Table)  219;  income  and  ex- 
penditures of  sickness  insurance 
societies,  (Table)  219;  insurance 
legislation,  73,  74,  75,  76,  77,  78, 
79,  80,  81,  144,  214,  215,  216,  221, 
222,  223;  insurance  of  employers 
in  private  companies,  19,  20,  22; 
invalidity  and  old  age  insurance, 
340-343 ;  legislation  affecting  work- 
men's compensation,  74;  num- 
ber and  per  cent  of  sickness  in- 
surance societies  and  of  their  mem- 
bership, (Table)  218;  number  and 
per  cent  of  sickness  insurance  so- 
cieties and  per  cent  of  their  mem- 
bership by  kind  of  benefit,  (Table) 
217;  number  and  value  of  policies 
in  and  amount  of  cantonal  subsidy 
to  insurance  department,  Canton 
Neuenburg,  (Table)  340;  number 
entitled  to  benefits  under  employ- 
ers' liability,  81;  occupations  pro- 
tected by  employers'  liability,  74; 
operation  of  employers'  liability 
law,  75;  premiums  in,  340,  341, 
342;  sickness  insurance  in,  214- 
223;  workingmen's  accidents  and 
compensation  paid  in  factories  and 
trades,  (Table)  75 

Accident  insurance  and  workmen's 
compensation  in,  73-81.  See  also 
Appendix  III  and  under  general 
topics 

Old  age  insurance  in:  benefits  under, 
340,  341,  342;  contributions  to, 
340,  341;  furnished  by  Canton 
Neuenburg,  340;  furnished  by  Can- 
ton Waadt,  341,  342;  no  federal 
provision  for,  340;  premiums,  340, 
341,342;  premiums  returnable  and 
non-returnable,  341,  342;  schemes 
for,  under  consideration  by  other 
cantons,  343 

Sickness  insurance  societies  in,  77,  78; 
administration  cost  of,  220;  bene- 
fits under,  217,  220,  221;  children 
enrolled  in,  217;  contributions  to, 
223;  development  of,  216,  217; 
existing  voluntary,  chief  factor  in 
government  scheme,  223;  growth 


474 


INDEX 


SWITZERLAND 

Sickness  insurance  societies  in  (con- 
tinued) 

of  communal  and  industrial, 
(Table)  219;  in  Geneva,  223;  in- 
come and  expenditures  of,  (Table) 
219;  legislation  affecting,  214,  215, 
216,  221,  222,  223;  number  and 
per  cent  of,  and  per  cent  of  their 
membership  by  kind  of  benefit, 
(Table)  217;  number  and  per  cent 
of  compulsory  and  voluntary,  and 
of  their  membership,  (Table)  218; 
protection  of  railway  and  steam- 
boat employes,  214,  218;  progress 
of  in,  221;  railway  and  steamboat 
employes  protected  by,  214;  sol- 
vency of,  218 

Unemployment  insurance  in,  385-387 ; 
benefits  under,  387;  contributions, 
386,  387,  in  Basel,  386,  387,  in 
Berne,  386,  in  St.  Gall,  386,  in 
trade  unions,  386,  387;  legislation 
affecting,  385,  386 


TENDENCY  TOWARD  A  COMPLETE  AND 
CONNECTED  SYSTEM  OF  INSURANCE 
FOR  WORKINGMEN,  393-403 

TIEFBAU  -  BERUFSGENOSSENSCHAFT, 
Germany,  99 

TRADE-GUILDS,  sickness  insurance  so- 
cieties: in  Austria,  265 

TRADE  UNIONS:  attitude  of,  toward 
compulsory  insurance  in  Germany, 
141;  benefits  provided  by,  150, 151; 
benefits  furnished  by,  in  Great 
Britain,  27,  28;  demand  compul- 
sory insurance  in  government  de- 
partments in  Great  Britain,  48; 
effect  of  establishment  societies 
upon,  153;  effect  upon,  of  sickness 
insurance  societies  in  Germany, 
158,  159;  number  and  membership 
of,  which  pay  benefits  in  France, 
(Table)  211;  object  to  workmen's 
compensation  act  in  Great  Britain, 
46;  oppose  establishment  funds 
in  Great  Britain,  27;  practically 
affiliated  sickness  insurance  so- 
cieties, 150,  151;  reserves  in,  151; 
sickness  insurance  societies,  in  Aus- 
tria, 264,  in  France,  210,  211;  un- 
employment insurance  in,  368, 369, 
in  Belgium,  384,  in  Denmark,  380, 
381,  in  France,  385,  in  Germany, 


TRADE  UNIONS  (continued) 

388,  390,  in  Holland,  382,  383,  in 
Italy,    387,    in    Norway,    380,    in 
Switzerland,  386,  387 

TYPES  OF  SICKNESS  INSURANCE  SOCIE- 
TIES: in  Austria,  265;  in  Germany, 
232>  233>  236;  in  Great  Britain, 
171;  in  Holland,  193,  194 

UNEMPLOYMENT  INSURANCE,  367-391; 
attitude  of  employers  toward,  369, 
370;  attitude  of  local  governments 
toward,  370, 371;  attitude  of  Social 
Democrats  toward,  391;  attitude 
of  state  toward,  370;  development 
°f>  367,  368;  difficulties  surround- 
ing, 367;  in  friendly  societies,  368; 
in  trade  unions,  368,  369;  interest 
of  different  classes  in,  369,  370; 
majority  of  workmen  unprotected 
by>  369;  success  of  compulsory, 
problematical,  377 

In  Austria,  391 

In  Belgium,  384;  benefits  under,  384; 
contributions,  384;  in  Ghent,  371, 
373,  384;  in  trade  unions,  384;  leg- 
islation affecting,  384 

In  Denmark,  373,  374,  380-382; 
benefits  under,  381;  contributions, 
381;  in  trade  unions,  380,  381; 
legislation  affecting,  380;  pre- 
miums, 382;  receipts  and  dis- 
bursements of  funds,  1908,  (Table) 
382 

In  France,  384-385;  benefits  under, 
385;  contributions,  384,  385;  in 
trade  unions,  385;  legislation 
affecting,  384,  385 

In  Germany,  388-391;  administra- 
tion, 388;  attitude  of  Social  Dem- 
ocrats toward.  391;  benefits  under, 

389,  390;    contributions,  388,  389, 

390,  in  Cologne,  371,372,388,390, 
in  Leipsic,  390,    in  Munich,  371, 
390,    in  Strasburg,  390,    in  trade 
unions,  388,  390;    municipal,  388; 
statistics    of    the    unemployment 
fund  in  Cologne,  (Table)  390 

In  Great  Britain,  378-379;  "distress 
work,"  378;  labor  situation  requir- 
ing, 378;  legislation  affecting,  379; 
proposed,  375,  376,  378,  379;  "Un- 
employed Workmen  Act,"  379 

In  Italy:  benefits  under,  387,  388; 
contributions,  387;  in  Milan,  387; 
in  trade  unions,  387;  La  Societa 


475 


INDEX 


UNEMPLOYMENT  INSURANCE 

In  Italy  (continued) 
Umanitarfa,  387,  388;      member- 
ship  and   benefits  of   Unemploy- 
ment department  of  Umanitaria, 
(Table)  388 

In  Holland,  382-383;  administration 
°f>  383;  benefits  under,  383;  con- 
tributions, 383;  in  Amsterdam, 
3?i»  372,  382,  383,  in  Arnheim, 
383,  in  Hiversum,  383,  in  The 
Hague,  373,  383,  in  trade  unions, 
382,  383,  in  Utrecht,  373,  383; 
legislation  affecting,  383;  pre- 
miums, 383 

In  Italy,  387-388 

In  Norway,  374,  375,  370-380,  in 
trade  unions,  380;  legislation  af- 
fecting, 380 

In  Sweden,  380 

In  Switzerland,  385-387;  benefits 
under,  387 ;  contributions,  386, 387 ; 
in  Basel,  386,  387,  in  Berne,  386; 
in  St.  Gall,  386,  in  trade  unions, 
386,  387;  legislation  affecting,  385, 
386 

In  various  countries,  378-391 

UNITED  STATES:  development  of  em- 
ployers' liability  insurance  in,  14, 
15,  16,  17,  18;  employers'  liability 
in,  3;  employers'  liability  in,  not 
limited,  17;  maternity  insurance 
in,  1 68;  pensions  to  widows  and 
orphans,  societies  insuring,  288 

UNMARRIED  WOMEN:  maternity  insur- 
ance covers,  167 


VALUATION  OF  SICKNESS  INSURANCE  SO- 
CIETIES: quinquennial,  required  in 
Great  Britain,  171, 181 

"VALUATION  OF  STAFF  PENSION 
FUNDS,  "  by  H.  W.  Manly,  298, 
299,  300 

VARIOUS  SYSTEMS  OF  INSURANCE  OF 
EMPLOYERS  from  the  standpoint  of 
public  policy,  133-144 

VEREINE,  Austria,  265,  269 

VIENNA  FEDERATION  OF  SICKNESS  IN- 
SURANCE SOCIETIES:  prevention  of 
work-accidents,  143,  144 

VITAL  STATISTICS:  compiled  by  German 
government,  239,  240,  241 


VOLUNTARY  INSURANCE:  discussion  of 
merits  of,  401, 402,403;  in  Austria, 
i2i;  invalidity,  in  Italy,  343;  in- 
validity, recommended  by  com- 
mission in  Denmark,  286;  number 
of  societies  in  Switzerland,  (Table) 
218;  for  old  age,  in  Italy,  343;  un- 
favorable conditions  surrounding 
sickness  insurance  on  a  voluntary 
basis,  156,  157 

VOLUNTARY  MUTUAL  AID  SICKNESS  IN- 
SURANCE SOCIETIES:  in  Germany 
233,  236 


WIDOWS.  See  Pensions  to  widows  and 
orphans 

"WILFUL  ACT":  interpretation  of,  in 
Great  Britain,  21,  44 

WORK-ACCIDENT  INSURANCE,  3-144. 
See  also  Accidents;  Work-accidents 

WORK- ACCIDENTS:  in  Denmark  reported 
to  state,  22;  increase  in  number 
of,  in  Austria,  123,  124,  125;  in- 
crease in  number  of,  in  France, 
71;  increase  in  number  of,  in  Ger- 
many, 102,  104;  insurance  against, 
3-144;  legislation  affecting,  86,  91, 
92;  part  of  cost  of  commodity,  3, 
9,  18;  statistics  relative  to,  in  Aus- 
tria compared  with  Germany,  125, 
126,  127;  statistics  relative  to.  in 
Germany,  102.  See  also,  Accident 
insurance;  Compensation;  Preven- 
tion of  work-accidents 

WORK- ACCIDENTS,  COMPENSATION  FOR: 
compensation  act  provides  for 
compensation  of  victims  of,  282; 
governed  by  business  principles,  9; 
in  Austria,  117,  118,  in  Belgium, 
62;  in  Denmark,  55;  in  France,  65; 
in  Germany,  92,  96,  97,  98,  99,  107, 
108,  in  Great  Britain,  43,  44;  in 
Great  Britain,  based  on  wages,  10; 
in  Holland,  58,  59;  in  Holland, 
based  on  wages,  10;  in  Italy,  83, 
84  85,  86;  in  Norway,  48,  49; 
in  Sweden,  51;  in  Switzerland, 
74,  432;  proportioned  to  actual 
financial  loss,  9,  10 

WORKINGMEN:  attitude  of,  toward  com- 
pulsory insurance  in  Germany, 
142;  majority  of,  unprotected  by 
unemployment  insuranc  e,  369; 
number  of,  insured  in  Austria,  122; 


476 


INDEX 


WORKINGMEN  (continued) 

number  of,  insured  in  France,  68; 
number  of,  insured  in  Germany, 
100;  number  of,  insured  in  Hol- 
land, 6 1 

WORKINGMEN 's  ASSOCIATIONS:  in  Great 
Britain,  44 

WORKINGMEN'S  INSURANCE:  old  age 
pensions  not  a  system  of,  309;  ten- 
dency toward  a  complete  and  con- 
nected system  of,  393-403;  su.m- 
mary  of,  in  European  countries, 
Appendix  I,  422-429 

WORKMEN'S  COMPENSATION:  beneficial 
results  of,  laws,  20,  21;  develop- 
ment of,  laws,  133,  134,  i3S;  ex- 
pense of  adjustment  under,  laws, 
21;  in  Austria,  115-132;  in  Bel- 
gium, 61-63;  in  Denmark,  54-57; 
in  France,  64-73;  in  Germany,  89- 
115;  in  Great  Britain,  42-48;  in 
Holland,  '57-61;  in  Italy,  81-89; 
in  Norway,  48-50;  in  Sweden,  51- 
54;  in  Switzerland,  73-81;  legis- 


WORKMEN'S  COMPENSATION  (continued) 
lation  affecting,  42,  43,  44,  46,  47, 
Si,  55.  58,  61,  64,  67,  72,  73,  74; 
more  economical  than  employers' 
liability  insurance,  10;  theory  of, 
8-13 

WORKMEN'S  COMPENSATION  ACT:  in 
Great  Britain,  n,  26,  27,  28, 44, 46; 
objections  to,  in  Great  Britain,  46; 
and  accident  insurance  in  various 
countries,  42-132;  occupations 
protected  by,  in  Belgium,  61;  occu- 
pations protected  by,  in  France, 
64,  67,  68;  provides  for  invalidity 
of  work-accident  victims,  282; 
simulation  under,  174 

WORKMEN'S  COMPENSATION  LAWS  IN 
EUROPEAN  COUNTRIES:  a  substi- 
tute for,  or  supplementary  to,  em- 
ployers' liability  laws,  18,  19 


ZlEKENZORG  HANDWERKERS  VfilENDEN- 

KRING,  Holland,  196 


477 


THE  SURVEY 

SOCIAL  CHARITABLE  CIVIC 

A  JOURNAL  OF  CONSTRUCTIVE   PHILANTHROPY 


THE  SURVEY  is  a  weekly  magazine  for  all  those  who 
believe  that  progress  in  this  country  hinges  on 
social  service:  that  legislation,  city  government,  the  care 
of  the  unfortunate,  the  cure  of  the  sick,  the  education  of 
children,  the  work  of  men  and  the  homes  of  women,  must 
pass  muster  in  their  relation  to  the  common  welfare. 

As  Critic,  THE  SURVEY  examines  conditions  of  life  and 
labor,  and  points  where  they  fail :  how  long  hours,  low  pay, 
insanitary  housing,  disease,  intemperance,  indiscriminate 
charity,  and  lack  of  recreation,  break  down  character  and 
efficiency. 

As  Student,  THE  SURVEY  examines  immigration,  industry, 
congestion,  unemployment,  to  furnish  a  solid  basis  of  fact 
for  intelligent  and  permanent  betterment. 

As  Program,  THE  SURVEY  stands  for  Prevention:  Pre- 
vention of  Poverty  through  wider  opportunity  and  adequate 
charity;  Prevention  of  Disease  through  long-range  systems 
of  sanitation,  of  hospitals  and  sanatoriums,  of  good  homes, 
pure  food  and  water,  a  chance  for  play  out-of-doors;  Pre- 
vention of  Crime,  through  fair  laws,  juvenile  courts,  real 
reformatories,  indeterminate  sentence,  segregation,  discip- 
line and  probation ;  Prevention  of  Inefficiency,  both  industrial 
and  civic,  through  practice  in  democracy,  restriction  of 
child  labor,  fair  hours,  fair  wages,  enough  leisure  for  reading 
and  recreation,  compulsory  school  laws  and  schools  that 
fit  for  life  and  labor,  for  the  earning  of  income  and  for 
rational  spending. 


EDWARD  T.  DEVINE    -    -    -     EDITOR 


I05  EAST  22D  STREET  »  ~      QQ     VP  A  P  I   V 

NEW  YORK  $^._       ICAKLY 


SOCIAL  FORCES 

By  EDWARD  T.  DEVINE 

Editor  The  Survey  j   General  Secretary  of  the  New  York  Charity  Organization  Society  j    Schiff 

Professor  of  Social  Economy,  Columbia  University  j   Author  of      Principles  of  Relief," 

"  Misery  and  Its  Causes,"  "  Efficiency  and  Relief,"  "  The  Practice  of  Charity,"  etc. 

Twenty-five  editorials  which  discuss  subjects  of  permanent  inter- 
est have  been  chosen  for  this  volume  from  among  the  six  score  or 
more  written  under  the  heading  Social  Forces  in  THE  SURVEY. 

They  stand  for  the  best  in  modern  practice  and  thinking  in  the  field  of 
charity. — Chicago  "  Record-Herald." 

He  displays  in  an  admirable  degree  the  spirit  which  will  unite  varied  inter- 
ests in  a  strong,  united  effort  against  a  common  foe. — "  The  Catholic  World." 

An  interesting  summary  of  social  ideals  and  forces  coming  to  the  front  in 
American  thought  and  life. — Boston  "  Evening  Transcript." 

Consistent,  optimistic,  stimulating. — Louisville  "  Journal." 

Second  Edition.     J2mo,  226  pp.     Price,  postpaid,  $1.00 

HOW  TWO  HUNDRED  CHILDREN  LIVE  AND  LEARN 
By  RUDOLPH  R.  REEDER,  Ph.D. 

Superintendent  New  York  Orphan  Asylum,  Hastings-on-Hudson,  New  York 

An  interesting  description  of  the  moving  of  an  orphanage  from 
a  "  barracks "  institution  in  the  city  to  country  cottages.  The 
author  believes  in  educating  the  children,  not  by  books  alone,  but 
by  the  sort  of  training  that  prepares  them  for  actual  life.  Every 
page  is  full  of  warm  life,  anecdote  and  story. 

Gives  a  new  meaning  to  child  training,  and  illustrates  in  a  vivid  way  the 
importance  of  education  outside  of  books. — "  Review  of  Reviews." 

Second  Edition.     I2mo,  248  pages.     Fully  illustrated.     Price,  postpaid,  $1.25 

VISITING  NURSING  IN  THE  UNITED  STATES 
By  YSSABELLA  WATERS 

Henry  Street  (Nurses')  Settlement,  New  York 

The  whole  book  is  so  practical  and  the  suggestions  are  so  concrete 
that  persons  wishing  to  establish  visiting  nursing  need  only  this 
volume  as  their  guide,  and  those  interested  in  existing  organizations 
can  gain  from  it  many  new  ideas  of  administration  and  efficiency. 
The  Directory  of  organizations  employing  trained  visiting  nurses  is 
a  most  valuable  feature. 

The  entire  nursing  profession  will  welcome  this  work. — The  Trained  Nurse 
and  Hospital  Review. 

Should  be  in  the  possession  of  and  be  read  by  every  nurse  and  every  social 
worker. —  George  W.  Goler,  M.  D.,  Health  Officer,  Rochester,  New  York. 

367  pages.    Price,  postpaid,  $1.25 


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